The banking sector in Malaysia saw stable loan growth of 10.9% year-over-year in March 2009, driven partly by a 20-30% jump in loans to government agencies and non-bank financial institutions. However, leading loan indicators remained subdued and loan growth is expected to slow significantly to 2-3% in 2009 due to weaker economic conditions. Non-performing loan ratios continued to improve in March. The report maintains a neutral outlook on Malaysian banks, expecting them to perform better than anticipated despite the economic downturn.

1. SECTOR UPDATE
30 April 2009
MALAYSIA
CIMB Research Report
Maintained
NEUTRAL
Banks
A picture of health
Winson Ng Gia Yann CFA +60(3) 2084 9686 - winson.ng@cimb.com
• Stable loan growth. The banking industry kept up its loan growth pace of 10.9%
yoy in Mar 09. This was partly driven by a 20-30% jump in loans classified as
“others”, which are loans extended to government agencies and non-bank
financial institutions. Business loan growth decelerated from 10% in Feb 09 to
9.5% in Mar 09 while the growth pace for consumer loans was sustained at 8.8%.
• Lethargic leading loan indicators. Leading loan indicators remained subdued in
Mar 09 – loan applications rose by only 4.8% yoy while loan approvals dipped by
0.7% yoy. The business loan segment was the culprit, with applications and
approvals dwindling 11-13% yoy and offsetting the 13-22% increase in the
indicators for consumer loans.
• Still expecting loan momentum to lose steam. We continue to expect a sharp
fall-off in industry loan growth from 12.8% in 2008 to 2-3% in 2009 given (1) the
sluggish leading loan indicators, (2) slower economic growth, and (3) the downshift
in car sales.
• Sliding lending rates. In response to the OPR cut on 24 Feb 09, banks reduced
their fixed deposit (FD) rates a few days later but BLRs for most banks were
lowered later by about 40bp in early Mar. As a result, FD rates were stable at 2.02-
2.52% but the average lending rate shrank by 105bp yoy and 33bp mom to an all-
time low of 5.16%.
• Ample liquidity. As loan growth of 10.9% outpaced the deposit growth of 8%,
banks’ loan-to-deposit rate tightened to 73.7% as at end-Mar 09 from 70.8% a
year ago. The system still has plenty of excess liquidity estimated to be about
RM219bn in mid-Apr 09 vs. RM216.8bn as at end-Mar 09.
• NPL ratio still improving, for now. Banks’ 3-month net NPL ratio declined by
73bp yoy to 2.2% in Mar 09 but was stable mom. Gross NPL ratio also fell by
154bp yoy and 21bp mom to 4.6%. The reserve coverage improved from 76.5% a
year ago to 86.4%, aided by a 16.9% yoy drop in gross NPLs against a 6.1%
decline in total provisioning.
• Maintain NEUTRAL. We remain NEUTRAL on Malaysian banks as the still-
healthy banking numbers suggest that banks could perform better than we and the
market expect despite the downbeat economic outlook. Although banks’ net
earnings are estimated to pull back 6.5% this year, we anticipate a 17.4% rebound
in 2010. Over the longer term, many banks will also reap the benefits from their
ongoing revamps and regional expansion. Public Bank remains our top pick for the
sector.
Sector comparisons
Core ROE
Target 3-yr EPS P/BV Div
P/E (x) (x) yield (%)
Bloomberg Price price Mkt cap CAGR (%)
(Local) (Local) (US$ m) (%)
ticker Recom. CY2009 CY2010 CY2009 CY2009 CY2009
Affin AHB MK U 1.70 1.36 707 11.6 10.5 (0.2) 0.5 4.8 2.9
2.36
Alliance AFG MK O 1.99 857 10.4 8.9 (5.0) 1.0 10.4 2.7
AMMB Hldgs AMM MK U 2.97 2.92 2,251 11.5 10.6 2.3 1.0 8.8 2.9
EON Capital EON MK U 3.50 2.65 675 14.2 13.5 25.3 0.7 5.2 2.1
Hong Leong Bank HLBK MK U 5.60 5.70 2,463 10.4 9.4 9.1 1.5 15.2 5.4
Malayan Banking MAY MK N 4.28 4.79 8,431 11.5 9.7 (7.1) 1.1 10.2 6.2
Public Bank PBK MK O 8.50 11.40 8,356 12.1 10.0 8.5 2.7 24.0 8.8
Public Bank-F PBKF MK O 8.45 11.40 8,306 12.0 9.9 8.5 2.7 24.0 8.9
RHB Cap RHBC MK O 4.04 5.22 2,421 11.9 10.1 (2.2) 1.1 9.1 3.4
Simple average 11.7 10.3 4.4 1.4 12.4 4.8
O = Outperform, N = Neutral, U = Underperform, TB = Trading Buy and TS = Trading Sell
Source: Company, CIMB Research
Please read carefully the important disclosures at the end of this publication.

2. Mar 09 banking tracker
Stable loan growth. The industry sustained its loan growth pace at 10.9% yoy in Mar
09, on par with the pace in the preceding month but slower than the 11.6% recorded
in Jan 09 and 12.8% in Dec 08. Mom loan growth picked up to 0.6% in Mar 09 from
0.2% in Jan-Feb 09. This was partly driven by a 20-30% jump in loans classified as
“others”, which are loans extended to government agencies and non-bank financial
institutions. On the flip side, slower-than-industry loan growth was racked up by
business loans (+9.5%) and consumer loans (+8.8%).
Slower pace for business loans but... Business loan growth eased to 9.5% in Mar
09 from 10% a month ago as SME loans reversed from 0.6% growth in Feb 09 to a
slight decline of 0.4% in Mar 09. However, corporate loan growth sustained a brisk
pace, estimated to be in the mid-to-high teens. By subsegment, manufacturing loans
dropped 0.7% (+2% in Feb 09) and growth decelerated for a few subsegments – from
11.2% to 9.1% for utility, from 4.9% to 3.6% for general commerce and from 4.6% to
3.9% for construction loans.
...sustained momentum for consumer loans. Consumer loans remained resilient,
with growth remaining at close to 9% yoy from Sep 08 to Mar 09. Residential
mortgages kept up a growth rate of about 10% but the pace for auto loans weakened
from 7.2% to 6.9%, offsetting the pick-up in the growth of credit card receivables from
8.1% to 8.6%.
Easing loan momentum in sight? Loan growth has slowed down from 1.9% qoq in
4Q08 to 1% qoq in 1Q09, substantiating our view that loan growth will head south in
2009. We project 2-3% loan growth for 2009, well below 2008’s 12.8%. Our
expectation of slower loan growth is underpinned by:
• subdued leading loan indicators
• the impact of slower economic growth, locally and globally
• the expected slowdown in car sales as we project a contraction of 15% for 2009.
Figure 1: Banking system’s loan base and yoy growth
Source: Bank Negara Malaysia
[2]

3. Figure 2: Breakdown of loans by purpose and sector
Loan by purpose
RM m Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09
Total loans 712,720.8 715,309.4 723,357.8 726,548.0 727,820.0 729,221.6 733,874.2
Purchase of securities 32,129.3 32,835.0 32,351.9 33,263.5 32,615.9 32,077.8 31,458.5
Purchase of transport vehicles 115,097.7 115,237.5 115,699.8 115,550.9 115,779.3 116,103.4 116,255.6
109,687.6 109,485.9 109,845.6 110,128.9 109,986.2
~ purchase of passenger cars 109,170.7 109,265.6
Purchase of residential property 187,428.3 188,935.0 190,530.1 192,176.4 193,562.9 194,575.9 195,662.7
Purchase of non-residential property 63,901.7 64,516.1 65,285.4 66,624.5 67,233.0 67,929.3 68,346.1
Purchase of other fixed asset 8,002.4 8,085.7 8,304.0 8,374.5 8,587.8 8,432.8 8,550.0
Personal use 30,098.7 30,130.1 30,678.0 31,180.5 31,547.8 31,841.0 32,298.5
Credit card 23,806.9 23,845.2 24,388.1 24,948.6 25,003.1 24,656.3 24,362.8
Purchase of Consumer durables 145.4 175.4 171.2 170.4 162.7 161.2 157.3
Construction 16,451.8 16,340.3 16,424.7 16,746.6 17,223.6 17,390.3 17,636.9
Working capital 211,422.9 208,032.6 209,336.1 207,490.0 206,208.8 206,239.4 205,413.3
Other purposes 24,235.5 27,176.5 30,188.5 30,022.2 29,895.0 29,814.2 33,732.5
By sector
Total loans 712,720.7 715,309.4 723,357.9 726,548.0 727,820.0 729,221.6 733,874.0
Agriculture 15,787.2 15,783.7 15,830.2 15,938.2 15,809.3 16,185.9 16,699.2
Mining 1,939.5 1,877.3 1,783.0 1,895.0 1,972.8 1,926.5 2,093.5
Manufacturing 84,026.7 83,137.0 82,893.7 81,085.9 79,962.0 78,039.4 76,397.0
Utility 4,106.2 4,242.5 4,304.3 4,545.5 4,691.1 4,781.2 4,714.7
General commerce 63,095.3 62,374.2 61,748.6 61,525.3 60,474.8 60,059.8 59,561.1
Construction 34,878.1 34,780.4 33,999.2 34,590.9 35,141.3 34,877.2 35,358.9
Real estate 24,111.5 24,189.0 25,078.3 25,498.9 25,662.5 25,893.7 27,102.5
Communication & transport 23,095.8 23,280.8 23,296.3 23,126.6 23,541.1 24,064.2 25,218.7
Finance 45,915.9 45,697.9 47,905.4 48,231.7 48,752.9 50,061.0 49,248.8
Education, health and others 7,073.4 9,085.0 11,766.5 12,713.3 12,609.3 12,770.1 15,856.8
Household 384,254.2 386,333.6 389,771.5 392,955.7 395,771.3 397,100.8 398,709.0
Others 24,436.9 24,528.0 24,980.9 24,441.0 23,431.6 23,461.8 22,913.7
yoy change Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09
By purpose
Total loans 10.5% 10.3% 10.7% 12.8% 11.6% 10.9% 10.9%
Purchase of securities -20.7% -19.0% -23.1% 29.6% 15.8% 11.9% 10.3%
Purchase of transport vehicles 8.9% 8.2% 8.6% 7.9% 7.3% 7.2% 6.9%
~ purchase of passenger cars 8.1% 7.5% 7.9% 7.1% 7.1% 7.3% 6.4%
Purchase of residential property 9.3% 9.7% 9.8% 10.2% 10.1% 10.3% 10.1%
Purchase of non-residential property 21.8% 21.2% 20.3% 21.2% 20.4% 19.4% 18.5%
Purchase of other fixed asset 45.0% 46.2% 47.8% 39.9% 39.7% 33.8% 32.6%
Personal use 15.9% 14.6% 13.9% 15.7% 16.6% 17.0% 16.0%
Credit card 10.2% 9.7% 11.0% 9.6% 9.0% 8.1% 8.6%
Purchase of Consumer durables -39.1% -2.6% -1.8% -0.8% -4.9% -4.8% -5.1%
Construction 6.0% 4.6% 5.7% 8.6% 9.2% 8.6% 9.8%
Working capital 16.6% 14.1% 15.0% 11.7% 10.8% 9.0% 6.9%
Other purposes -1.3% 12.0% 23.3% 19.6% 15.3% 18.3% 41.7%
By sector
Total loans 10.5% 10.3% 10.7% 12.8% 11.6% 10.9% 10.9%
Agriculture 10.4% 10.3% 13.3% 14.3% 10.8% 13.5% 17.1%
Mining 42.6% 28.6% 10.5% 18.0% 16.9% 12.2% 30.6%
Manufacturing 15.6% 14.1% 12.6% 8.8% 6.7% 2.0% -0.7%
Utility 14.4% 16.2% 11.9% 19.1% 9.1% 11.2% 9.1%
General commerce 14.0% 12.4% 11.3% 9.0% 6.1% 4.9% 3.6%
Construction 9.3% 8.8% 5.5% 7.6% 6.9% 4.6% 3.9%
Real estate 29.5% 26.8% 28.4% 26.1% 23.4% 21.9% 24.5%
Communication & transport -26.5% -26.8% -26.2% 52.8% 57.6% 59.3% 62.7%
Finance 23.8% 20.3% 25.9% 20.8% 19.8% 21.6% 18.6%
Education, health and others 3.5% 32.9% 72.9% 85.0% 80.6% 82.0% 125.4%
Household 9.5% 9.4% 9.6% 9.7% 9.4% 9.4% 9.3%
Others 17.8% 23.7% 19.4% 14.0% 8.1% 3.9% 3.0%
Source: Bank Negara Malaysia
[3]

4. Figure 3: Banking system’s major loan indicators
RM bn Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09
Overall
Loan applications 44.4 40.7 43.0 43.6 52.3 40.1 35.6 35.7 32.2 31.6 33.1 42.4
Loan approvals 29.4 26.2 24.7 26.1 29.1 23.0 20.0 21.2 20.5 16.7 18.0 24.3
Loan disbursements 55.4 52.7 54.4 57.6 55.4 55.1 52.6 52.4 53.0 49.1 43.5 55.5
Chg in loan outstanding 4.2 9.5 10.6 8.6 13.0 5.3 2.6 8.0 3.2 1.4 1.4 4.7
Business
Loan applications 22.7 20.4 21.7 21.2 33.1 20.5 18.7 17.5 15.6 15.8 17.6 18.6
Loan approvals 15.5 13.4 11.8 11.6 16.9 10.9 9.1 9.6 10.8 6.9 8.0 11.1
Loan disbursements 39.2 36.9 39.4 41.7 39.9 39.2 38.3 37.2 39.3 32.9 29.2 38.8
Chg in loan outstanding 0.8 5.5 13.3 4.8 8.4 1.0 -0.2 -0.7 -0.4 -1.5 -0.4 -0.2
SMEs
Loan applications 10.1 9.2 9.1 9.7 9.7 9.7 7.3 6.9 6.0 5.8 6.6 7.9
Loan approvals 5.6 4.7 5.5 5.9 4.2 3.8 3.7 4.0 4.1 2.5 3.0 3.4
Loan disbursements 13.5 13.3 14.5 14.6 14.4 14.2 13.5 12.7 13.4 11.9 11.2 11.5
Chg in loan outstanding 0.4 1.0 2.8 0.9 2.7 -0.9 0.3 0.3 -0.5 -5.6 -1.9 -0.1
Households
Loan applications 21.7 20.3 21.2 22.4 19.2 19.6 16.8 18.2 16.5 15.8 16.5 23.8
Loan approvals 13.9 12.8 12.8 14.5 12.2 12.1 10.8 11.6 9.7 9.7 9.9 13.2
Loan disbursements 16.2 15.8 14.9 15.9 15.5 15.9 14.2 15.2 15.9 16.2 14.3 16.7
Chg in loan outstanding 3.3 3.0 2.3 3.1 3.1 3.6 1.6 3.3 3.0 3.5 1.2 1.5
yoy % growth Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09
Overall
Loan applications 52.4 -9.7 -5.2 11.9 25.5 -5.8 -7.9 -32.6 -18.8 -21.0 8.1 4.7
Loan approvals 57.5 -19.0 -23.4 2.3 15.4 -2.9 -14.4 -44.0 -23.7 -35.6 -15.9 -0.7
Loan disbursements 34.1 15.7 8.8 -4.9 14.9 9.1 8.2 7.5 0.6 -10.0 -5.6 9.0
Chg in loan outstanding 10.1 11.0 11.7 9.9 11.0 10.6 10.3 10.7 12.8 11.7 10.9 10.9
Business
Loan applications 52.7 -27.1 -25.8 -0.2 48.4 -17.2 -2.5 -49.2 -33.7 -21.1 14.1 -11.0
Loan approvals 49.9 -38.2 -45.6 -19.5 25.9 -17.9 -26.4 -64.5 -37.9 -50.9 -29.2 -13.0
Loan disbursements 36.7 16.0 9.7 -7.0 21.0 8.7 16.5 9.1 -2.7 -14.2 -9.1 7.8
Chg in loan outstanding 11.5 12.6 14.4 9.4 11.4 9.5 8.8 7.8 13.2 11.8 10.0 9.5
SMEs
Loan applications 43.0 11.8 5.7 6.6 -1.5 -0.4 -8.7 -35.7 -18.1 -29.3 -13.7 -9.8
Loan approvals 39.1 2.1 -3.2 5.0 -20.4 -29.8 -12.6 -29.2 4.3 -45.1 -19.2 -25.4
Loan disbursements 20.6 13.4 20.1 25.2 16.6 18.1 11.4 -3.4 8.2 -13.9 -15.4 -11.0
Chg in loan outstanding 11.4 11.0 11.3 12.0 13.2 11.0 10.5 10.2 9.4 3.6 -0.6 -0.4
Households
Loan applications 52.1 18.8 32.4 26.4 -0.8 9.8 -13.3 -1.8 3.2 -20.8 2.4 21.5
Loan approvals 66.9 20.4 22.9 30.6 3.5 16.2 -0.8 6.9 2.3 -18.1 -0.8 12.6
Loan disbursements 28.1 15.3 6.5 1.2 1.7 10.1 -9.4 3.7 9.3 0.0 2.5 11.9
Chg in loan outstanding 8.2 8.7 8.9 8.8 8.7 9.1 8.9 9.0 9.1 9.1 8.9 8.8
Source: Bank Negara Malaysia
[4]

5. Figure 4: Consumer vs. business yoy loan growth
Source: Bank Negara Malaysia
Figure 5: Yoy growth of various consumer loan sub-segments
Source: Bank Negara Malaysia
Lethargic leading loan indicators. Leading loan indicators remained weak in Mar
09, with a 4.7% yoy increase in applications and a 0.7% decline in loan approvals.
However, the small decline in approvals is a big improvement on the 15.9% slump
recorded in Feb 09. For business loans, applications fell by 11% yoy (+14.1% in Feb
09) while approvals dropped 13%, after a 29.2% decline in the preceding month. This
offset the strong growth of 21.5% for consumer loan applications and 12.6% for
consumer loan approvals.
[5]

6. Figure 6: Banking industry’s loan applications and yoy growth
Source: Bank Negara Malaysia
Figure 7: Banking industry’s loan approvals and yoy growth
Source: Bank Negara Malaysia
Figure 8: Banking industry’s loan disbursements and yoy growth
Source: Bank Negara Malaysia
Sliding lending rates. Following the cut in the overnight policy rate (OPR) on 24 Feb
09, banks reduced their fixed deposit (FD) rates a few days later but most of them
only lowered their BLRs in early Mar 09. As a result, FD rates were stable at 2.02-
2.52% in Mar 09 but BLR dropped by 36bp to 5.53%. Meanwhile, banks’ average
lending rate (ALR) contracted by 105bp yoy and 33bp mom to an all-time low of
5.16%, primarily because of the rate cuts.
[6]

7. Bottoming of rate cuts. At yesterday’s Monetary Policy Committee (MPC) meeting,
Bank Negara kept the OPR at 2%, which is in line with the expectations of our
economic research team but against market expectations of a further reduction. We
expect the OPR to stay at 2% for the rest of 2009. Even if there is a rate cut, we do
not expect it to erode banks’ margins as both BLR and FD rates would be lowered by
around the same quantum. This was the case in the previous two rounds of rate cuts
in Jan-Feb 09. Moreover, should there be any reduction in statutory reserve
requirements (SRR), the overall impact would be positive.
Figure 9: Deposit and lending rates (%)
% Fixed deposits Savings BLR ALR
1 3 6 9 12
Jan-06 3.01 3.03 3.05 3.09 3.70 1.42 6.21 6.15
Feb-06 3.02 3.04 3.07 3.11 3.70 1.43 6.34 6.29
Mar-06 3.03 3.06 3.11 3.16 3.70 1.44 6.47 6.29
Apr-06 3.06 3.12 3.21 3.31 3.73 1.46 6.58 6.42
May-06 3.11 3.17 3.31 3.44 3.76 1.47 6.72 6.51
Jun-06 3.11 3.18 3.32 3.45 3.77 1.47 6.72 6.55
Jul-06 3.12 3.19 3.34 3.48 3.78 1.46 6.72 6.63
Aug-06 3.12 3.19 3.34 3.48 3.77 1.46 6.72 6.64
Sep-06 3.13 3.21 3.36 3.49 3.77 1.46 6.72 6.63
Oct-06 3.13 3.21 3.36 3.49 3.76 1.46 6.72 6.56
Nov-06 3.11 3.20 3.35 3.47 3.75 1.48 6.72 6.59
Dec-06 3.11 3.19 3.34 3.46 3.73 1.48 6.72 6.57
Jan-07 3.11 3.19 3.34 3.45 3.72 1.49 6.72 6.57
Feb-07 3.11 3.19 3.34 3.45 3.71 1.44 6.72 6.54
Mar-07 3.10 3.18 3.34 3.45 3.71 1.43 6.72 6.48
Apr-07 3.10 3.18 3.33 3.43 3.71 1.44 6.72 6.48
May-07 3.10 3.18 3.32 3.42 3.71 1.44 6.72 6.44
Jun-07 3.09 3.17 3.32 3.42 3.71 1.44 6.72 6.49
Jul-07 3.08 3.15 3.29 3.38 3.70 1.44 6.72 6.34
Aug-07 3.08 3.15 3.29 3.38 3.70 1.44 6.72 6.35
Sep-07 3.08 3.15 3.29 3.38 3.70 1.43 6.72 6.30
Oct-07 3.08 3.15 3.29 3.38 3.70 1.43 6.72 6.26
Nov-07 3.08 3.15 3.29 3.38 3.70 1.44 6.72 6.31
Dec-07 3.08 3.15 3.29 3.38 3.70 1.44 6.72 6.29
Jan-08 3.08 3.15 3.29 3.38 3.70 1.44 6.72 6.27
Feb-08 3.08 3.14 3.28 3.37 3.70 1.44 6.72 6.27
Mar-08 3.08 3.14 3.28 3.37 3.70 1.43 6.72 6.21
Apr-08 3.08 3.14 3.28 3.37 3.70 1.42 6.72 6.19
May-08 3.08 3.14 3.28 3.36 3.70 1.42 6.72 6.13
Jun-08 3.08 3.14 3.28 3.36 3.70 1.41 6.72 6.08
Jul-08 3.08 3.14 3.28 3.36 3.70 1.41 6.72 6.02
Aug-08 3.08 3.14 3.28 3.36 3.70 1.41 6.72 5.98
Sep-08 3.08 3.14 3.28 3.36 3.70 1.42 6.72 5.96
Oct-08 3.08 3.14 3.28 3.36 3.70 1.42 6.72 6.01
Nov-08 3.03 3.06 3.16 3.22 3.60 1.39 6.66 5.98
Dec-08 3.01 3.04 3.11 3.14 3.50 1.40 6.48 5.86
Jan-09 2.53 2.54 2.56 2.57 3.02 1.25 6.38 5.77
Feb-09 2.05 2.07 2.07 2.08 2.55 1.11 5.89 5.49
Mar-09 2.02 2.04 2.05 2.06 2.52 0.95 5.53 5.16
Source: Bank Negara Malaysia
Note: ALR – Average lending rate
Figure 10: Summary of rate cuts
Summary of rate cuts
Date 24-Nov-08 21-Jan-09 24-Feb-09 Total
Avg. quantum of reduction (bp)
OPR 25 75 50 150
BLR 25 55 40 120
FD rates 15 50 35 100
Source: CIMB Research, Bank Negara Malaysia
Note: * Based on CIMB Research’s expectations
[7]

8. Figure 11: BLRs of major banks before and after previous OPR cuts
Before 24 Nov08 After 25bp OPR cut on 24 After 75bp OPR cut on 21 Jan 09 After 50bp OPR cut on 24 Feb 09
Maybank 6.75% 6.50% 5.95% 5.55%
CIMB Bank 6.75% 6.50% 5.95% 5.55%
Public Bank 6.75% 6.50% 5.95% 5.55%
RHB Bank 6.75% 6.50% 5.95% 5.55%
AmBank 6.75% 6.55% 5.95% 5.55%
Hong Leong Bank 6.75% 6.50% 5.95% 5.55%
EON Bank 6.75% 6.50% 5.95% 5.55%
Alliance Bank 6.75% 6.50% 5.95% 5.55%
Affin Bank 6.75% 6.55% 5.90% 5.50%
Citibank 6.75% 6.55% 6.00% 5.60%
HSBC Bank 6.75% 6.50% 5.75% 5.55%
Standard Chartered 6.75% 6.50% 5.95% 5.55%
UOB 6.75% 6.50% 5.95% 5.55%
OCBC 6.75% 6.50% 5.95% 5.55%
Source: Company
Figure 12: Fixed deposits rates for banks before and after OPR cut in Feb 09
Before 50bp OPR cut in Feb 09
Tenure (months)
Banks 1 2 3 4 5 6 7 8 9 10 11 12
Maybank 2.50% 2.50% 2.50% 2.50% 2.50% 2.60% 2.60% 2.60% 2.60% 2.60% 2.60% 3.00%
CIMB Bank 2.50% 2.50% 2.50% 2.50% 2.50% 2.60% 2.60% 2.60% 2.60% 2.60% 2.60% 3.00%
Public Bank 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 3.00%
RHB Bank 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 3.00%
AmBank 2.50% 2.50% 2.55% 2.55% 2.55% 2.55% 2.60% 2.60% 2.88% 2.65% 2.65% 3.00%
Hong Leong Bank 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 3.00%
EON Bank 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 3.00%
Alliance Bank 2.70% 2.70% 2.60% 2.60% 2.60% 2.60% 2.50% 2.50% 2.50% 2.50% 2.50% 3.00%
Affin Bank 2.60% 2.60% 2.70% 2.70% 2.75% 2.75% 2.75% 2.75% 2.75% 2.80% 2.80% 3.00%
Citibank 2.50% 2.50% 2.50% 2.50% 2.50% 2.60% 2.60% 2.60% 2.60% 2.60% 2.60% 3.00%
HSBC Bank 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 3.00%
Standard Chartered 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 3.00%
UOB 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 3.00%
OCBC 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 3.00%
After 50bp OPR cut in Feb 09
Tenure (months)
Banks 1 2 3 4 5 6 7 8 9 10 11 12
Maybank 2.00% 2.05% 2.10% 2.10% 2.10% 2.10% 2.10% 2.10% 2.10% 2.10% 2.10% 2.50%
CIMB Bank 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.50%
Public Bank 2.00% 2.05% 2.10% 2.10% 2.10% 2.10% 2.10% 2.10% 2.10% 2.10% 2.10% 2.50%
RHB Bank 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.50%
AmBank 2.00% 2.10% 2.10% 2.15% 2.15% 2.20% 2.20% 2.25% 2.25% 2.30% 2.30% 2.50%
Hong Leong Bank 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.50%
EON Bank 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.50%
Alliance Bank 2.00% 2.00% 2.00% 2.00% 2.00% 1.90% 1.90% 1.90% 1.90% 1.90% 1.90% 2.50%
Affin Bank 2.00% 2.00% 2.10% 2.10% 2.10% 2.20% 2.20% 2.20% 2.30% 2.30% 2.30% 2.50%
Citibank 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.50%
HSBC Bank 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.50%
Standard Chartered 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.50%
UOB 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.50%
OCBC 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.50%
Source: Company, bankinginfo
Still awash with liquidity. In Mar 09, banks’ total deposits increased by RM9.3bn or
8% yoy (Feb 09: RM0.3bn or +8.3% yoy). The increase in deposits was due to the
payment of outlays by the government during the month. By customer, higher
deposits were placed by financial institutions, business enterprises and, to a lesser
extent, individuals. By type, the increase in deposits was mainly in the form of
negotiable instruments of deposits (NIDs) and Islamic banking system (IBS) deposits.
As the annual loan growth of 10.9% outpaced the deposit growth, banks’ loan-to-
deposit ratio tightened to 73.7% as at end-Mar 09 from 70.8% a year ago. However,
the banking system is still flush with liquidity, as reflected by our economic research
team’s estimate of RM219bn excess liquidity as at mid-Apr 09 vs. RM216.8bn as at
end-Mar 09 and RM225bn as at end-Feb 09.
[8]

9. Improving NPL ratio, for now. Banks’ 3-month net NPL ratio dropped by 73bp yoy to
2.2% in Mar 09 but was stable compared to the preceding month’s level. Gross NPL
ratio, meanwhile, was down by 154bp yoy and 21bp mom to 4.6%. Also, the reserve
coverage strengthened from 76.5% a year ago to 86.4% in Feb 09, aided by a 16.9%
yoy drop in gross NPLs to RM33.6bn, against a 6.1% decline in total provisioning to
RM24.9bn.
Figure 13: Banking system’s net NPL ratio & loan loss coverage (3-mth classification)
Source: Bank Negara Malaysia
Figure 14: Banking system’s net NPL ratio & loan loss coverage (6-mth classification)
Source: Bank Negara Malaysia
[9]

10. Figure 15-1: Breakdown of NPLs by purpose
NPLs by purpose
RM'm Mar-08 Jun-08 Sep-08 Dec-08 Mar-09
Total NPLs 39,245.6 36,127.6 35,127.0 34,073.0 32,790.8
Purchase of securities 969.1 787.4 751.2 710.4 499.3
Purchase of transport vehicles 2,425.7 2,131.1 1,954.5 2,029.7 2,050.2
~ purchase of passenger cars 2,309.4 2,039.4 1,870.2 1,949.8 1,936.8
Purchase of residential property 11,736.6 10,837.9 10,491.9 10,731.6 10,878.3
~ <=25k 217.9 184.5 172.8 168.6 160.2
~ > 25k to 60k 1,301.9 1,120.4 1,078.7 1,107.1 1,101.1
~ > 60k to 100k 2,325.4 2,135.7 2,064.0 2,113.8 2,119.0
~ > 100lk to 150k 2,567.1 2,401.8 2,323.6 2,366.8 2,383.5
~ > 150k to 250k 3,049.3 2,825.4 2,702.0 2,722.4 2,752.1
~ > 250k 2,254.9 2,170.0 2,150.7 2,253.0 2,362.4
Purchase of non-residential property 3,178.5 2,990.4 2,847.9 2,686.5 2,431.2
~ <=25k 507.5 479.0 479.2 480.1 483.8
~ > 25k to 60k 648.6 651.5 590.2 489.7 422.3
~ > 60k to 100k 507.0 451.7 435.4 440.7 318.0
~ > 100lk to 150k 1,123.6 1,030.3 984.0 945.9 909.1
~ > 150k to 250k 391.8 377.9 359.0 330.1 297.9
Purchase of other fixed asset 197.1 234.5 237.0 233.8 257.8
Personal use 1,800.5 1,574.4 1,582.0 1,585.4 1,523.0
Credit card 566.2 537.4 515.0 590.4 629.6
Purchase of Consumer durables 15.2 9.7 10.1 10.9 10.9
Construction 2,033.6 1,971.6 1,870.5 1,676.3 1,611.0
Working capital 13,814.3 13,423.6 13,474.5 12,418.6 11,616.1
Other purposes 2,508.8 1,629.6 1,392.4 1,399.3 1,283.4
Gross NPL ratio (%) Mar-08 Jun-08 Sep-08 Dec-08 Mar-09
Total loans 5.9% 5.3% 4.9% 4.7% 4.5%
Purchase of securities 3.4% 2.6% 2.3% 2.1% 1.6%
Purchase of transport vehicles 2.2% 1.9% 1.7% 1.8% 1.8%
~ purchase of passenger cars 2.2% 1.9% 1.7% 1.8% 1.8%
Purchase of residential property 6.6% 6.0% 5.6% 5.6% 5.6%
Purchase of non-residential property 5.5% 4.9% 4.5% 4.0% 3.6%
Purchase of other fixed asset 3.1% 3.3% 3.0% 2.8% 3.0%
Personal use 6.5% 5.5% 5.3% 5.1% 4.7%
Credit card 2.5% 2.3% 2.2% 2.4% 2.6%
Purchase of Consumer durables 9.2% 6.4% 6.9% 6.4% 6.9%
Construction 12.7% 12.2% 11.4% 10.0% 9.1%
Working capital 7.2% 6.7% 6.4% 6.0% 5.7%
Other purposes 10.5% 6.8% 5.7% 4.7% 3.8%
Source: Bank Negara Malaysia
[ 10 ]

11. Figure 15-2: Breakdown of NPLs by sector
By sector Mar-08 Jun-08 Sep-08 Dec-08 Mar-09
Total loans 39,245.5 36,127.7 35,126.9 34,073.0 32,790.9
Agriculture 440.2 393.0 361.1 350.7 363.4
Mining 34.2 36.0 40.2 44.2 45.0
Manufacturing 6,048.3 5,729.4 5,601.9 5,721.4 5,603.0
1,161.9 1,155.3 1,161.0 607.2 197.6
Utility
General commerce 3,396.8 2,909.7 2,991.0 2,920.5 2,918.5
Wholesale trade 1,783.3 1,551.3 1,733.1 1,728.0 1763..6
Retail trade 1,104.2 1,056.3 949.1 941.1 944.6
Restaurants & hotels 509.3 302.1 308.9 251.4 210.3
4,524.4 4,149.8 4,022.0 3,504.8 3,234.3
Construction
422.2 345.9 335.6 338.2 337.3
Transport
2,621.2 2,665.7 2,564.2 2,362.8 2,092.1
Finance & business activities
Financial intermediation 391.5 374.4 368.7 329.5 285.8
Real estate 1,465.2 1,442.7 1,446.1 1,361.6 1,215.5
Research & development 0.0 0.0 0.2 0.3 0.2
Other business activities 764.5 848.6 749.2 671.4 590.5
862.2 658.1 621.8 454.8 262.9
Education, health and others
17,951.3 16,382.8 15,795.5 16,219.0 16,144.2
Household
Others 1,782.8 1,702.0 1,632.6 1,549.4 1,592.7
By sector (gross NPL ratio) Mar-08 Jun-08 Sep-08 Dec-08 Mar-09
Total loans 5.9% 5.3% 4.9% 4.7% 4.5%
Agriculture 3.1% 2.6% 2.3% 2.2% 2.2%
Mining 2.1% 2.0% 2.1% 2.3% 2.1%
Manufacturing 7.9% 7.0% 6.7% 7.1% 7.3%
Utility 26.9% 28.5% 28.3% 13.4% 4.2%
General commerce 5.9% 4.8% 4.7% 4.7% 4.9%
Construction 13.3% 12.1% 11.5% 10.1% 9.1%
Transport 2.7% 1.9% 1.5% 1.5% 1.3%
Finance & business activities 6.3% 6.2% 5.6% 4.9% 4.2%
Education, health and others 12.3% 9.6% 8.8% 3.6% 1.7%
Household 4.9% 4.4% 4.1% 4.1% 4.0%
Others 8.0% 7.2% 6.7% 6.3% 7.0%
Source: Bank Negara Malaysia
Higher net funds raised in Mar 09. In Mar 09, net funds raised in the capital market
amounted to RM11bn, compared to a net redemption of RM3.9bn in the preceding
month. In the public sector, a total of RM12.3bn was raised through the re-opening of
the 3-year and 5-year Malaysian Government Securities (MGS) and through the
issuance of Merdeka savings bonds. On a net basis, the public sector drummed up
RM6.6bn funds.
In the private sector, gross funds raised also increased to RM6.8bn, significantly
higher than the previous month’s RM1.9bn. The bulk of the funds was raised by firms
in the finance, transportation and construction sectors. After adjusting for redemption,
net funds raised by the private sector amounted to RM4.4bn. The higher net funds
drummed up by the private sector in Mar 09 points to a potential recovery in deal flow
and bodes well for banks’ investment banking income.
Valuation and recommendation
Tougher times ahead. Banks’ loan growth has been easing from 3.9% in 3Q08 to
1.9% in 4Q08 to 1% in 1Q09. Furthermore, SME loan growth has decelerated from
last year’s pace of 9-13% yoy to a contraction of 0.4% as at end-Mar 09. On this note,
we are sticking to our view that loan growth will head south in the coming months,
especially with the leading loan indicators remaining weak. We project a loan growth
of 2-3% for 2009. We also expect the worsening economic situation to exert further
pressure on banks’ asset quality. This underpins our anticipated 2.4% pt rise in the
industry’s gross NPL ratio to about 7% in 2009.
Remain NEUTRAL. We are maintaining our NEUTRAL stance on Malaysian banks as
the slower loan growth in 1Q09 is within our expectations. Given the economic
downturn, we expect the loan growth to decelerate and NPL to creep up. However,
local banks could perform better than our and market expectations, going by the still-
healthy latest banking numbers. Although banks’ net profits are estimated to shrink by
6.5% in 2009, we anticipate a 17.4% rebound in 2010. In the longer term, most banks
will benefit from their ongoing transformation programmes and regional expansion.
[ 11 ]

12. Public Bank still our top pick. We view Public Bank (PBK MK, Outperform) as one
of the most defensive local banks. Its strengths are reflected by its superior ROE of
20%+, loan growth in the teens, benign NPL ratio of 1% and its cost-to-income ratio of
early 30%, which is the lowest in the industry. The potential share price triggers
include (1) superior ROE, (2) increased contributions from Greater China, (3) above-
industry loan growth, and (4) new growth avenue from its bancassurance business.
Another plus is its attractive dividend yield of 9-12%.
Other favourites. We also like two other Malaysian banks:
• RHB Capital (RHBC MK, Outperform) for the benefits from its ongoing
transformation programme, value-add from its strategic partner, Abu Dhabi
Commercial Bank and the potential for regional expansion.
• Alliance Financial Group (AFG MK, Outperform), underpinned by its prudent and
agile management which will help to mitigate the jump in NPLs, the expected
revival of swift loan growth in CY10 and undemanding CY10 P/E of 8.9x vs. the
sector average of 10.3x.
Figure 16: Comparison of banks’ Dupont ratios
FY07 Affin Alliance AMMB EON Cap HL Bank Maybank PBB RHB Cap
ROE (%) 6.5 5.8 -5.7 7.0 13.8 17.6 23.1 11.9
Tax & MI retention (x) 0.71 0.71 3.34 0.78 0.72 0.73 0.71 0.57
Overheads coverage (x) 0.61 0.31 -0.06 0.47 1.15 1.15 1.77 0.83
Cost efficiency (x) 0.51 0.53 0.45 0.44 0.42 0.43 0.33 0.44
Dependence on non-int inc (x) 1.68 1.61 2.21 1.58 1.51 1.72 1.58 1.61
Margin (%) 1.89 2.29 1.82 2.11 1.77 2.13 2.02 2.01
Equity multiplier (x) 9.28 13.56 15.20 12.99 14.68 13.34 17.52 17.41
FY08
ROE (%) 6.8 16.8 11.2 4.2 15.3 15.2 27.3 14.1
Tax & MI retention (x) 0.72 0.76 0.56 0.64 0.73 0.72 0.76 0.74
Overheads coverage (x) 0.69 1.07 0.77 0.28 1.19 0.96 1.89 0.94
Cost efficiency (x) 0.52 0.46 0.46 0.53 0.42 0.44 0.31 0.44
Dependence on non-int inc (x) 1.57 1.60 2.06 1.47 1.46 1.77 1.54 1.55
Margin (%) 1.98 2.36 2.02 2.26 1.85 2.06 2.01 2.11
Equity multiplier (x) 8.44 11.93 13.50 13.23 15.34 13.66 19.62 14.11
FY09
ROE (%) 4.8 11.7 11.3 5.2 14.5 9.4 24.0 9.1
Tax & MI retention (x) 0.75 0.75 0.72 0.75 0.74 0.66 0.70 0.74
Overheads coverage (x) 0.48 0.81 0.71 0.29 1.14 0.64 1.87 0.55
Cost efficiency (x) 0.54 0.48 0.47 0.48 0.41 0.52 0.30 0.49
Dependence on non-int inc (x) 1.83 1.53 2.12 1.49 1.47 1.80 1.56 1.79
Margin (%) 1.66 2.33 1.93 2.40 1.91 1.84 1.98 1.80
Equity multiplier (x) 8.19 11.12 11.36 13.77 14.69 12.88 19.83 13.96
FY10
ROE (%) 5.1 10.0 8.0 5.2 15.4 10.9 25.6 10.1
Tax & MI retention (x) 0.75 0.75 0.71 0.74 0.74 0.69 0.73 0.75
Overheads coverage (x) 0.50 0.71 0.51 0.30 1.25 0.72 1.99 0.61
Cost efficiency (x) 0.54 0.47 0.45 0.49 0.40 0.51 0.29 0.46
Dependence on non-int inc (x) 1.85 1.56 1.95 1.52 1.46 1.88 1.53 1.77
Margin (%) 1.69 2.13 2.22 2.23 2.03 1.90 2.10 1.91
Equity multiplier (x) 7.99 11.97 11.33 14.30 14.00 12.07 19.23 14.33
FY11
ROE (%) 5.8 11.6 9.2 7.2 14.5 11.4 25.5 10.6
Tax & MI retention (x) 0.75 0.75 0.72 0.73 0.74 0.69 0.72 0.74
Overheads coverage (x) 0.57 0.84 0.58 0.41 1.20 0.74 2.09 0.66
Cost efficiency (x) 0.53 0.42 0.45 0.48 0.40 0.50 0.28 0.46
Dependence on non-int inc (x) 1.85 1.48 1.97 1.52 1.48 1.85 1.50 1.77
Margin (%) 1.75 2.34 2.17 2.20 2.00 2.01 2.07 1.93
Equity multiplier (x) 7.89 12.69 11.47 14.73 13.61 12.01 19.19 13.95
Source: Company, CIMB/CIMB-GK Research
[ 12 ]

13. Figure 17: Key financial information
Banks 2007 2008 2009 2010 2011 Banks 2007 2008 2009 2010 2011
Net profit (RM m) BV/share (RM)
Maybank 3,178.4 2,928.2 2,132.1 2,946.1 3,296.5 Maybank 3.54 3.56 3.69 3.95 4.21
BCHB 2,793.3 1,952.0 BCHB 4.66 4.77
PBB 2,123.9 2,581.2 2,480.9 3,001.2 3,296.5 PBB 2.65 2.70 3.15 3.50 3.83
RHBCAP 712.8 1,048.7 730.2 860.7 980.3 RHBCAP 3.27 3.63 3.82 4.11 4.44
AMMB (282.5) 668.5 855.1 649.6 798.8 AMMB 2.25 2.63 2.91 3.07 3.31
HLB 620.8 741.8 776.4 916.7 962.8 HLB 2.92 3.22 3.53 3.87 4.24
EONCAP 217.1 133.8 170.7 179.9 263.6 EONCAP 4.60 4.62 4.88 5.10 5.44
Affin 251.8 292.8 218.4 240.5 291.4 Affin 2.85 2.95 3.11 3.25 3.43
Alliance 107.4 380.1 316.8 291.2 364.4 Alliance 1.60 1.67 1.82 1.95 2.12
Total 6,929.7 8,775.2 7,680.5 9,086.0 10,254.2
EPS (sen) Price/BV (x)
Maybank 59.4 54.1 34.1 41.5 46.5 Maybank 1.2 1.2 1.2 1.1 1.0
BCHB 85.2 57.8 BCHB 1.7 1.7
PBB 60.8 73.1 70.2 85.0 93.3 PBB 3.2 3.1 2.7 2.4 2.2
RHBCAP 35.8 48.7 33.9 40.0 45.5 RHBCAP 1.2 1.1 1.1 1.0 0.9
AMMB (13.1) 27.5 31.4 23.9 29.3 AMMB 1.3 1.1 1.0 1.0 0.9
HLB 39.3 46.9 49.1 58.0 60.9 HLB 1.9 1.7 1.6 1.4 1.3
EONCAP 31.3 19.3 24.6 25.9 38.0 EONCAP 0.8 0.8 0.7 0.7 0.6
Affin 17.0 19.6 14.6 16.1 19.5 Affin 0.6 0.6 0.5 0.5 0.5
Alliance 9.0 27.5 20.5 18.8 23.5 Alliance 1.2 1.2 1.1 1.0 0.9
Average 1.4 1.4 1.2 1.1 1.1
EPS growth (%) DPS (sen)
Maybank 12.1 (9.0) (36.9) 21.8 11.9 Maybank 57.5 49.0 22.4 27.6 36.9
BCHB 68.2 (32.1) BCHB 40.0 25.0
PBB 22.0 20.1 (3.9) 21.0 9.8 PBB 75.0 79.0 74.9 90.6 99.6
RHBCAP 49.2 35.9 (30.4) 17.9 13.9 RHBCAP 13.6 19.6 13.6 16.0 18.2
AMMB (171.2) 309.5 14.0 (24.0) 23.0 AMMB 5.0 6.0 10.5 8.0 9.8
HLB 12.9 19.5 4.7 18.1 5.0 HLB 24.0 24.0 27.5 32.5 34.1
EONCAP 2.2 (38.4) 27.6 5.4 46.5 EONCAP 10.0 5.8 7.4 7.8 13.3
Affin (7.8) 15.5 (25.4) 10.1 21.2 Affin 5.0 5.0 4.9 4.3 5.1
Alliance 152.0 205.3 (25.6) (8.1) 25.2 Alliance - 6.3 6.3 5.0 7.8
Average 8.9 69.8 (9.5) 7.8 19.6
P/E (x) Div Yield (%)
Maybank 7.2 7.9 12.6 10.3 9.2 Maybank 13.4 11.4 5.2 6.4 8.6
BCHB 9.3 13.7 BCHB 5.1 3.2
PBB 14.0 11.6 12.1 10.0 9.1 PBB 8.8 9.3 8.8 10.7 11.7
RHBCAP 11.3 8.3 11.9 10.1 8.9 RHBCAP 3.4 4.9 3.4 4.0 4.5
AMMB (22.6) 10.8 9.5 12.4 10.1 AMMB 1.7 2.0 3.5 2.7 3.3
HLB 14.3 11.9 11.4 9.7 9.2 HLB 4.3 4.3 4.9 5.8 6.1
EONCAP 11.2 18.1 14.2 13.5 9.2 EONCAP 2.9 1.6 2.1 2.2 3.8
Affin 10.0 8.7 11.6 10.6 8.7 Affin 2.9 2.9 2.9 2.5 3.0
Alliance 22.1 7.2 9.7 10.6 8.5 Alliance 0.0 3.1 3.1 2.5 3.9
Average 8.4 10.6 11.6 10.9 9.1 Average 4.7 5.0 4.2 4.6 5.6
Source: Company, CIMB/CIMB-GK Research
[ 13 ]

14. Figure 18: Key income statement information and ratios
Banks 2007 2008 2009 2010 2011 Banks 2007 2008 2009 2010 2011
ROE (%) Net interest margin (%)
Maybank 17.6 15.2 9.4 10.9 11.4 Maybank 2.37 2.31 2.08 2.15 2.27
BCHB 20.3 11.9 BCHB 2.88 2.62
PBB 23.1 27.3 24.0 25.6 25.5 PBB 2.11 2.10 2.06 2.16 2.13
RHBCAP 11.9 14.1 9.1 10.1 10.6 RHBCAP 2.15 2.27 1.93 2.03 2.04
AMMB (5.7) 11.2 11.3 8.0 9.2 AMMB 1.99 2.23 2.13 2.42 2.36
HLB 13.8 15.3 14.6 15.7 15.0 HLB 1.83 1.93 2.01 2.14 2.15
EONCAP 7.0 4.2 5.2 5.2 7.2 EONCAP 2.24 2.39 2.51 2.31 2.27
Affin 6.5 6.8 4.8 5.1 5.8 Affin 2.08 2.17 1.80 1.82 1.88
Alliance 5.8 16.8 11.7 10.0 11.6 Alliance 2.48 2.52 2.47 2.23 2.44
Average 10.0 13.9 11.3 11.3 12.0 Average 2.16 2.24 2.12 2.16 2.19
ROA (%) Growth in revenue (%)
Maybank 1.3 1.1 0.7 0.9 0.9 Maybank 9.5 8.8 0.8 20.2 10.6
BCHB 1.6 1.0 BCHB 41.0 (6.7)
PBB 1.3 1.4 1.2 1.3 1.3 PBB 19.7 12.3 10.6 13.9 6.9
RHBCAP 0.7 1.0 0.7 0.7 0.8 RHBCAP 11.4 1.7 4.8 14.8 5.9
AMMB (0.4) 0.8 1.0 0.7 0.8 AMMB 9.8 11.2 4.4 13.7 6.6
HLB 0.9 1.0 1.0 1.1 1.1 HLB 8.4 14.2 9.5 10.9 7.8
EONCAP 0.5 0.3 0.4 0.4 0.5 EONCAP 7.1 5.3 15.9 3.3 7.2
Affin 0.7 0.8 0.6 0.6 0.7 Affin 4.9 (0.3) (1.1) 5.7 6.9
Alliance 0.4 1.4 1.1 0.8 0.9 Alliance 20.0 10.3 5.7 8.2 19.3
Average 0.7 1.0 0.8 0.8 0.9 Average 11.3 7.9 6.3 11.3 8.9
Yield on earning assets (%) Non-interest income ratio (%)
Maybank 5.0 4.9 4.7 4.4 4.5 Maybank 32.3 33.6 33.4 36.4 35.7
BCHB 6.0 5.4 BCHB 47.3 34.2
PBB 4.9 4.7 3.8 3.9 3.9 PBB 27.2 25.3 26.3 25.2 23.7
RHBCAP 5.0 4.9 4.3 4.2 4.2 RHBCAP 28.4 27.5 32.0 31.8 31.2
AMMB 4.9 5.2 5.0 4.5 4.5 AMMB 38.0 36.2 36.3 32.4 32.4
HLB 4.5 4.3 3.9 3.6 3.6 HLB 25.7 23.7 23.5 22.6 23.0
EONCAP 5.1 4.9 4.5 4.3 4.3 EONCAP 24.6 19.7 21.3 21.8 21.4
Affin 5.0 4.7 4.1 4.1 4.1 Affin 29.3 23.3 30.1 29.6 29.0
Alliance 4.9 4.8 4.7 3.8 3.9 Alliance 23.2 26.1 23.0 24.0 21.5
Average 4.9 4.8 4.4 4.1 4.1 Average 28.6 26.9 28.3 28.0 27.2
Average cost of funds (%) Cost-to-income ratio (%)
Maybank 2.8 2.7 2.7 2.4 2.4 Maybank 42.8 44.2 52.5 50.7 50.0
BCHB 3.2 3.0 BCHB 46.9 53.2
PBB 2.8 2.7 1.8 1.8 1.9 PBB 33.1 31.2 29.7 28.5 28.3
RHBCAP 2.9 2.7 2.4 2.3 2.3 RHBCAP 44.4 43.9 49.2 45.6 45.7
AMMB 3.1 3.1 3.1 2.2 2.3 AMMB 44.8 46.1 47.5 44.7 44.8
HLB 2.8 2.5 2.0 1.6 1.6 HLB 42.3 42.1 41.1 39.5 39.2
EONCAP 3.0 2.6 2.1 2.1 2.1 EONCAP 44.2 53.0 47.6 48.7 48.1
Affin 3.1 2.7 2.4 2.4 2.4 Affin 50.8 51.6 53.6 54.0 53.4
Alliance 2.5 2.5 2.4 1.7 1.5 Alliance 53.3 46.2 48.4 47.3 41.8
Average 2.9 2.7 2.4 2.1 2.1 Average 44.5 44.8 46.2 44.9 43.9
Source: Company, CIMB/CIMB-GK Research
[ 14 ]

15. Figure 19: Key balance sheet information and ratios
Banks 2007 2008 2009 2010 2011 Banks 2007 2008 2009 2010 2011
Loan growth (%) Net NPL ratio (%)
Maybank 7.2 17.0 15.5 7.0 7.5 Maybank 3.1 1.9 3.9 3.9 3.6
BCHB 6.1 21.3 BCHB 3.8 2.3
PBB 20.0 19.2 11.6 8.4 8.0 PBB 1.2 0.9 2.5 2.2 2.0
RHBCAP 2.2 11.1 4.8 5.6 5.5 RHBCAP 3.4 2.2 4.2 4.0 3.7
AMMB 6.1 10.2 10.5 6.2 5.1 AMMB 6.2 3.7 3.0 4.3 4.0
HLB 10.6 9.1 4.5 6.0 6.6 HLB 1.9 1.4 3.0 2.6 2.2
EONCAP 3.7 5.0 1.6 1.4 3.4 EONCAP 4.1 2.3 3.8 2.8 1.6
Affin (0.5) 15.3 (4.5) (0.7) 5.3 Affin 7.9 3.2 5.5 5.6 5.2
Alliance (0.9) 16.3 20.5 12.3 15.8 Alliance 5.5 3.3 3.7 6.0 6.0
Average 6.1 12.9 8.0 5.8 7.2 Average 4.2 2.4 3.7 3.9 3.5
Deposit growth (%) Loan loss coverage (%)
Maybank 20.1 14.3 13.2 6.2 5.9 Maybank 80.3 99.2 66.6 68.4 72.4
BCHB 21.7 20.9 BCHB 69.3 88.1
PBB 24.1 16.9 5.2 12.3 9.1 PBB 119.5 159.7 64.9 78.6 89.9
RHBCAP 31.8 (2.4) 14.1 5.2 5.0 RHBCAP 71.4 90.3 64.4 69.0 73.9
AMMB 8.9 12.7 9.6 9.8 9.2 AMMB 56.6 67.3 74.7 66.3 71.2
HLB 28.1 10.3 1.2 6.0 5.7 HLB 86.5 103.9 66.4 76.4 86.0
EONCAP 6.0 9.7 6.7 11.8 8.5 EONCAP 63.0 84.0 73.2 87.5 101.7
Affin (0.5) 5.4 1.9 3.8 3.9 Affin 58.8 71.6 58.5 62.6 67.0
Alliance 8.1 11.8 19.5 17.8 15.0 Alliance 67.5 79.9 70.6 47.6 45.2
Average 15.8 9.8 8.9 9.1 7.8 Average 75.4 94.5 67.4 69.6 75.9
Loan-to-deposit ratio (%) Earnings assets / total assets (%)
Maybank 86.1 88.1 89.8 90.5 91.9 Maybank 89.5 88.4 88.2 88.2 88.3
BCHB 75.6 76.5 BCHB 90.6 91.4
PBB 71.6 73.0 77.4 74.7 74.0 PBB 95.6 95.8 96.9 97.1 97.3
RHBCAP 72.0 81.9 75.3 75.6 76.0 RHBCAP 93.3 92.9 94.2 94.4 94.7
AMMB 112.3 109.8 110.7 107.1 103.0 AMMB 90.9 90.1 91.4 91.7 92.1
HLB 55.8 55.2 57.0 57.1 57.6 HLB 92.4 96.1 99.0 96.9 97.1
EONCAP 102.8 98.4 93.7 85.0 81.0 EONCAP 94.1 94.9 96.6 96.8 97.0
Affin 67.6 74.0 69.3 66.3 67.3 Affin 91.3 91.4 92.7 92.9 93.0
Alliance 70.3 73.2 73.8 70.3 70.8 Alliance 92.9 93.7 95.2 95.8 96.0
Average 79.8 81.7 80.9 78.3 77.7 Average 92.5 92.9 94.3 94.2 94.4
RWCAR (%) Total loans / total assets (%)
Maybank 15.1 14.4 12.4 12.3 12.5 Maybank 54.9 61.2 60.1 60.4 61.2
BCHB BCHB 52.5 56.8
PBB 13.5 13.9 14.0 13.7 13.6 PBB 57.0 60.4 61.8 60.2 59.8
RHBCAP 12.1 11.1 10.6 11.0 11.4 RHBCAP 51.9 58.0 53.2 53.5 53.8
AMMB 12.6 13.5 14.7 14.2 14.1 AMMB 60.6 63.3 65.4 64.2 62.5
HLB 16.8 16.4 15.4 15.7 16.0 HLB 44.3 44.6 45.6 45.4 45.6
EONCAP 11.2 10.8 10.2 9.7 11.4 EONCAP 68.6 68.3 63.7 59.1 56.5
Affin 14.2 15.8 14.0 13.6 13.4 Affin 47.8 54.1 50.9 48.9 49.6
Alliance 16.6 16.4 15.4 15.1 15.0 Alliance 50.9 56.4 58.0 56.5 57.6
Average 14.0 14.0 13.3 13.2 13.4 Average 54.5 58.3 57.4 56.0 55.8
Source: Company, CIMB/CIMB-GK Research
[ 15 ]

16. Figure 20: Key information and ratios for loans and deposits
Banks 2007 2008 2009 2010 2011 Banks 2007 2008 2009 2010 2011
Gross loans (RM bn) Residential mortgages / total loans (%)
Maybank 147.5 171.2 198.3 212.7 229.3 Maybank 22.2 19.6 20.3 20.6 20.7
BCHB 101.0 122.5 BCHB 22.1 23.6
PBB 101.0 120.3 134.7 146.6 158.8 PBB 25.8 25.9 27.3 28.7 29.7
RHBCAP 56.8 63.2 66.3 70.3 74.5 RHBCAP 23.2 22.1 25.6 27.0 28.4
AMMB 50.7 54.9 60.7 65.1 68.7 AMMB 20.2 19.4 19.0 19.4 19.3
HLB 32.5 35.4 37.2 39.6 42.4 HLB 37.3 37.5 39.3 39.6 40.2
EONCAP 29.3 30.9 31.9 32.9 34.5 EONCAP 19.5 20.0 19.7 19.4 21.8
Affin 18.9 20.8 20.1 20.2 21.4 Affin 17.3 16.1 18.1 18.9 21.1
Alliance 14.5 16.5 19.7 22.0 25.3 Alliance 31.1 34.3 37.2 38.9 41.2
Total 451.2 513.2 569.0 609.5 654.9 Average 24.6 24.4 25.8 26.6 27.8
Gross NPLs (RM bn) HP loans / total loans (%)
Maybank 8.3 6.5 12.0 13.3 14.3 Maybank 12.0 14.1 14.2 15.8 16.6
BCHB 7.3 6.1 BCHB 12.8 10.8
PBB 1.4 1.2 4.0 4.3 4.6 PBB 21.5 20.6 20.1 19.6 19.2
RHBCAP 3.2 2.8 4.4 4.7 5.0 RHBCAP 11.6 10.8 11.3 11.1 11.0
AMMB 5.5 3.6 3.7 5.3 5.6 AMMB 42.5 42.4 41.8 40.2 39.6
HLB 1.0 0.8 1.6 1.7 1.9 HLB 13.7 14.2 13.0 12.4 11.8
EONCAP 1.7 1.5 2.5 2.8 2.9 EONCAP 30.1 29.3 28.9 28.7 28.0
Affin 2.7 1.2 1.9 2.1 2.2 Affin 31.5 30.5 31.6 31.8 30.8
Alliance 1.6 1.2 1.2 1.7 1.9 Alliance 9.9 8.1 7.4 6.4 6.6
Total 25.4 18.8 31.3 36.0 38.3 Average 21.6 21.2 21.0 20.8 20.4
Performing loans (RM bn) Consumption credit / total loans (%)
Maybank 139.2 164.7 186.3 199.4 215.0 Maybank 5.3 5.4 5.5 5.5 5.4
BCHB 93.7 116.4 BCHB 5.3 5.1
PBB 99.6 119.1 130.7 142.3 154.3 PBB 18.0 18.7 18.1 17.7 17.4
RHBCAP 53.6 60.3 61.9 65.6 69.4 RHBCAP 6.8 6.8 7.0 7.1 7.2
AMMB 45.2 51.3 57.0 59.8 63.1 AMMB 7.2 6.8 6.9 7.2 7.4
HLB 31.5 34.6 35.6 37.9 40.6 HLB 11.6 12.1 12.6 12.6 12.5
EONCAP 27.6 29.4 29.4 30.2 31.6 EONCAP 6.6 6.7 6.9 6.9 6.8
Affin 16.2 19.6 18.3 18.1 19.2 Affin 4.1 4.0 4.4 4.5 4.5
Alliance 12.9 15.4 18.5 20.3 23.5 Alliance 7.8 9.8 9.5 9.3 8.8
Total 425.9 494.4 537.7 573.5 616.6 Average 8.4 8.8 8.9 8.8 8.8
Total deposits (RM bn) Consumer loans / total loans (%)
Maybank 163.7 187.1 211.8 224.9 238.2 Maybank 39.6 39.0 40.0 41.9 42.8
BCHB 126.9 153.4 BCHB 40.2 39.5
PBB 138.8 155.6 170.7 191.7 209.2 PBB 65.3 65.2 65.5 65.9 66.3
RHBCAP 75.8 74.0 84.4 88.7 93.1 RHBCAP 41.5 39.7 43.8 45.3 46.6
AMMB 0.9 0.6 0.8 0.8 0.7 AMMB 69.9 68.6 67.7 66.9 66.2
HLB 56.7 62.5 63.3 67.1 70.9 HLB 62.7 63.7 64.9 64.6 64.5
EONCAP 26.9 29.5 32.1 35.9 39.0 EONCAP 56.3 56.0 55.6 55.0 56.6
Affin 25.6 26.9 27.5 28.5 29.6 Affin 52.9 50.6 54.0 55.2 56.4
Alliance 19.1 21.4 25.5 30.1 34.6 Alliance 48.9 52.2 54.0 54.6 56.7
Total 507.4 557.7 616.1 667.7 715.3 Average 54.6 54.4 55.7 56.2 57.0
Source: Company, CIMB/CIMB-GK Research
[ 16 ]

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[ 17 ]

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RECOMMENDATION FRAMEWORK #1*
STOCK RECOMMENDATIONS SECTOR RECOMMENDATIONS
OUTPERFORM: The stock's total return is expected to exceed a relevant OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is
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months.
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12 months.
UNDERPERFORM: The stock's total return is expected to be below a relevant UNDERWEIGHT: The industry, as defined by the analyst's coverage universe,
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months.
TRADING BUY: The stock's total return is expected to exceed a relevant TRADING BUY: The industry, as defined by the analyst's coverage universe, is
benchmark's total return by 5% or more over the next 3 months. expected to outperform the relevant primary market index over the next 3
months.
TRADING SELL: The stock's total return is expected to be below a relevant TRADING SELL: The industry, as defined by the analyst's coverage universe,
benchmark's total return by 5% or more over the next 3 months. is expected to underperform the relevant primary market index over the next 3
months.
* This framework only applies to stocks listed on the Singapore Stock Exchange, Bursa Malaysia, Stock Exchange of Thailand and Jakarta Stock Exchange. Occasionally, it is permitted for the total expected returns to be
temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons.
CIMB-GK Research Pte Ltd (Co. Reg. No. 198701620M)
[ 18 ]