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Tuesday March 12, 2013

Maybank offers one of the highest dividend yields


Maybank had the lowest foreign ownership among the large banks Maybank had the lowest foreign ownership among the large banks

PETALING JAYA: Malayan Bank Bhd and RHB Capital Bhd, which are Credit Suisse's top picks, have piqued the interest of foreign investors.

Maybank climbed 13 sen to RM9.26 with close to 20 million shares traded while RHB Capital rose 18 sen to RM8.38 with a trading volume of 3.2 million shares.

Another of its top pick was Alliance Financial Group Bhd, which, however, went down 2 sen to RM4.28.

In a recent report, the foreign research house said it favoured banks that had sufficient capital or a plan in place to address capital deficit that did not imply any near-term cash call risk and were perceived by investors to be politically neutral.

“We believe that these three stocks have defensive qualities that would enable them to better withstand any potential selling pressure in the run-up to the general elections,” it added.

It said RHB traded at a price-to-earnings (P/E) discount of more than 30% to industry peers (2013: P/E of 9.7 times) and had one of the lowest foreign ownership of 8%.

Meanwhile, Maybank had the lowest foreign ownership among the large banks and offered one of the highest net dividend yields in the market of 6% to 7%, it noted.

Alliance, which was deemed as a takeover target for Singapore-based DBS Group Holdings Ltd, traded at attractive valuations (2013: P/E of 11 times) and offered a 4% net dividend yield.

It also pointed out that only Maybank and Alliance had sufficient capital to comply with new regulatory limits.

“Malaysia is the worst performing market over the past six months despite street earnings estimate momentum being positive (2013 estimates increases 3% over the past six months), due mainly to concerns over political risk in the run-up to upcoming general elections,” it said.

It also noted that Malaysian banks' P/E premium to regional peers had diminished to 24% compared with a 39% premium six months earlier and 34% premium three months ago.

Besides political risks, another concern that could cap share price performance was the ability of banks to meet the stricter capital requirements to be imposed by Bank Negara, it added.

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