MAYBANK: Strategic Vision and Cost Efficiencies Propel Future Growth, Target Price Raised

A leading financial institution has outlined an ambitious strategic roadmap aimed at achieving significant growth and enhanced profitability by 2030. The comprehensive “ROAR30” plan focuses on leveraging core strengths and addressing future market opportunities, leading to a revised “BUY” recommendation and an increased target price from the investment bank.

Performance Review and Strategic Drivers

The institution targets a Return on Equity (ROE) of 13-14% by 2030, a notable increase from 9M25’s 11.5%. This growth is expected to be supported by a 5-6% Compound Annual Growth Rate (CAGR) in net operating income and a 6-7% CAGR in core fee income. A key element of this strategy is rigorous cost management, with a target Cost-to-Income Ratio (CIR) of ≤47% by 2030, down from 9M25’s 48.9%. While near-term technology investments are anticipated to exert some upward pressure on CIR, these will be offset by ongoing cost optimisation initiatives and income growth. Management also highlighted positive results from asset and liability management, which led to a 2 basis point quarter-on-quarter Net Interest Margin (NIM) improvement in 3Q25, with further improvements expected from asset yields. Credit costs are projected to remain stable at approximately 20 basis points.

Future Outlook and Core Thrusts

The ROAR30 strategy is built upon four core business areas: Global Islamic finance, regional wealth management, transaction and payments banking, and corporate and investment banking. These thrusts aim to capitalize on rising regional wealth, trade, foreign direct investment, and Islamic finance demand. The plan underscores continued technology investments, allocating MYR10bn for operational and capital expenditure over the next five years to support innovation and digital transformation. While the strategy primarily focuses on organic growth, potential capital management initiatives are yet to be factored in. Management acknowledges headwinds such as heightened uncertainty in the global financial services environment, but the overall macroeconomic outlook remains sanguine, supporting stronger earnings momentum and continued valuation multiple expansion.

Investment Recommendation

Based on a blend of strong liquidity inflows, a positive macroeconomic outlook, and anticipated robust earnings momentum, the investment bank has revised its target price upwards. The new target price of RM0.25 (representing a 25.0% upside) is set, with a maintained “BUY” recommendation. This valuation incorporates a revised intrinsic value derived from a lower cost of equity assumption, reflecting a resilient domestic economy and easing tariff risks, alongside an ESG premium.