Banking Weekly Review : 10th – 16th November 2008

November 24, 2008 at 2:13 am Leave a comment

Barometer of health
Four banking groups released their quarterly results during the week (Maybank, AMMB, Hong Leong and Bumiputra-Commerce), two of which met expectations and two of which fell short. Not particularly surprising, weaker capital market activities impacted Bumiputra-Commerce more so than the others. Nevertheless, a more telling and encouraging statistic is that loans growth remains strong against the backdrop of improving asset quality, which points to continued health of the banking system.

Major shareholders still increasing equity stakes
As with the preious week, various major shareholders which include the likes of the Employees Provident Fund (EPF), Kumpulan Wang Amanah Persaraaan (KWAP), Permodalan Nasional Berhad (PNB) and Lembaga Tabung Angkatan Tentera (LTAT) were seen increasing their equity stakes in financial insitutions. Maybank’s share price posted negative returns for the week however, as a number of exceptional items reported seem to have spooked investors.

Domestic newsflows quiet
The only significant piece of news on the domestic banking front was that surrounding AMMB Holdings, when it announced the entering into of an MOU with MAA Holdings and MAA Assurance for the purchase of the latters’ general insurance business for a headline price of RM274.8m (subject to adjustments). During the week, there was also talk that an additional 19% of AmAssurance could be added onto the 30% that it had already obtained approvals from Bank Negara to negotiate the stake sale of, to Friends Provident PLC (for a total of 49%).

Valuations relateively undemanding
With the exception of Public Bank and Hong Leong Bank, valuations of the other banking groups under coverage appear relatively undemanding versus the industry. While ‘digestion’ issues regarding its recent Indonesian acquisition may continue to plauge Maybank, concerns over significant
weakening of earnings from non-interest income for Bumiputra-Commerce Holdings and AMMB Holdings appear to have more than priced-in. As share prices continue to show more value in the current soft market conditions, we are however maintaining our NEUTRAL stance on the sector until we see
consistent signs of strengthening banking statistics to match our optimism on the sector.

FOUR RESULTS RELEASED, TWO SLIGHLTY DISAPPOINTING
Maybank, Bumiputra-Commerce, AMMB and Hong Leong Bank released their respective quarterly results during the week, with the disappointments coming from the former two. Maybank’s results were impaired by certain exceptional losses reported, while weak capital market activities took a more severe toll on Bumiputra-Commerce than had been expected. An encouraging statistic was consistent with all the banking groups however, in that loans growth continued to be strong against the backdrop of improving asset qualities. Loan-loss coverages improved, net NPL ratios declined further and RWCAR remained steady. Loans growth continued to be spurred by the consumer sector, with hire purchase financing and personal financing driving growth of most financial institutions. The following few tables
highlight certain key figures reported by the institutions over the last week.

MAJOR SHAREHOLDERS SEEN RAISING EQUITY STAKES FURTHER
As with the preious week, various major shareholders which include the likes of the Employees Provident Fund (EPF), Kumpulan Wang Amanah Persaraaan (KWAP), Permodalan Nasional Berhad (PNB) and Lembaga Tabung Angkatan Tentera (LTAT) were seen increasing their equity stakes in financial insitutions. Maybank’s share price posted negative returns for the week however, as a number of exceptional items reported seem to have spooked investors.

BANKING NEWSFLOWS

• AMMB Holdings announced the entering into of an MOU with MAA Holdings and MAA Assurance for the purchase of the latter’s general insurance business for headline price of RM274.8mn (subject to adjustments). Should the deal be completed, the acquisition will propel the group’s general insurance business into being one the largest in the country, with gross premiums written exceeding RM1.0bn per annum.
• It was also reported during the week in news articles on the possibility of AMMB Holdings selling a 49% stake in AmAssurance Berhad to Friends Provident PLC to tap into the latter’s expertise and helping it grow its life insurance business. The Group had, in December last year, already obtained Bank Negara’s approval to negotiate the sales of a 30% stake to Friends Provident, a UK-listed life and
pensions company with £101.8bn funds under management.

Entry filed under: Business, Finance, Stock Market. Tags: , , , , , , , , , , .

CAR KEYS AT NIGHT China Continues To Land Orderly And Gradually

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Trackback this post  |  Subscribe to the comments via RSS Feed



%d bloggers like this: