Maybank expected to increase quarterly dividend

[MALAYSIA] Maybank, one of Malaysia's largest financial institutions, is poised to increase its quarterly dividend payout. As investors look to assess the bank's financial health and potential returns, analysts are optimistic about the bank's performance heading into the future. The anticipated rise in Maybank's dividend is a reflection of its strong market positioning and solid financial performance, which are expected to support consistent returns to shareholders.

Strong Financial Position and Optimistic Outlook

According to RHB Research, Maybank’s net interest income (NII) for the fourth quarter ending December 31, 2024, is expected to hold up well, fueled by positive loan growth and efforts to manage its net interest margin (NIM). The bank’s ability to strategically manage its loan yields and deposit costs appears to be yielding positive results, giving the company confidence moving forward.

"Maybank continues to see strong growth in its net interest income, with their efforts to manage loan yields and deposit costs now showing clear signs of success," says an analyst from RHB Research. Despite a modest growth rate compared to previous quarters, Maybank’s focus on optimizing its financial performance is expected to yield substantial dividends for its shareholders.

Dividend Payout Projections

RHB Research projects that Maybank will declare a dividend per share (DPS) of 34 sen for the fourth quarter of 2024, which marks an increase from 31 sen in the same period in 2023. This would push the bank's full-year dividend to 63 sen, up from 60 sen in 2023. With a payout ratio already slightly down from last year's 76% to 70% in the first half of 2024, investors are advised to be cautious about potential risks to the bank's DPS estimate.

“Although the overall sentiment is positive, we do not discount the possibility of a downside risk to our DPS estimate due to a lower-than-expected second-half performance,” the research report notes.

Despite this caution, the anticipated increase in the quarterly dividend is seen as a testament to Maybank's resilience and its ongoing efforts to strengthen its financial fundamentals.

Challenges and Market Conditions

Maybank's NIM in the third quarter of 2024 showed a slight dip, down by three basis points quarter-on-quarter. However, the bank has taken proactive steps to address this by rebalancing its loan book and shifting away from lower-yield loans, particularly in global banking. This strategic move is expected to enhance yields, particularly in the fourth quarter of 2024.

"Rebalancing its loan book remains a key strategy for Maybank, especially in improving the overall quality of its yields," adds RHB Research.

On the funding side, Maybank has been focusing on growing its current account and savings account (CASA) base. The growth in CASA is attributed to initiatives such as digital onboarding and an innovative cash management platform, both of which are expected to contribute to a stable and growing revenue base.

Investor Sentiment and Stock Performance

The news of the anticipated dividend increase has generally been well-received in the market, though there is some caution due to the overall economic uncertainty and the bank's operational challenges. As of the latest trading session, Maybank’s stock closed at RM10.52, down 0.75%, with a market capitalization of RM126.94 billion. This slight dip in stock value has not deterred long-term investors, who are optimistic about the bank’s ability to maintain a solid growth trajectory.

In the view of analysts, Maybank’s diversified operations and commitment to maintaining a stable financial footing make it an attractive investment for those seeking reliable income from dividends.

Overall, Maybank's quarterly dividend is expected to rise, which will likely provide strong returns to investors in 2024. The bank’s prudent financial management, strategic shifts in its loan portfolio, and growth in CASA deposits all contribute to a favorable outlook for the institution. While there may be some short-term risks, the bank's robust business model and consistent focus on profitability provide confidence that Maybank will continue to be a strong performer in the Malaysian banking sector.

For investors looking to benefit from both capital appreciation and regular dividend income, Maybank’s outlook remains positive, and its rising quarterly dividend is a key indicator of its ongoing financial health.