MAYBANK: Strategic Plan ROAR30 Fuels Optimism for Banking Sector Performance
| Investment Bank | PUBLIC INVESTMENT BANK |
|---|---|
| TP (Target Price) | RM11.70 (+5.8%) |
| Last Traded | RM11.06 |
| Recommendation |
A major banking group has unveiled an ambitious five-year strategic blueprint, ROAR30, aimed at capitalising on long-term growth opportunities across ASEAN. The plan outlines a path to achieve a Return on Equity (ROE) of 13-14% by the financial year 2030, building on a strong track record of ROE growth from 9.3% in FY22 to 11.5% in the first nine months of FY25.
Key Financial Targets
The strategic plan sets several key financial targets, including maintaining a CASA ratio above 41%, a net interest margin (NIM) exceeding 2.05%, and keeping net credit cost stable at 20 basis points. Furthermore, the bank aims for its cost-to-income ratio (CTI) to fall below 47% and net operating income to grow at a compound annual growth rate (CAGR) of 5-6% from FY25-30F. These aspirations are expected to be supported by ongoing capital management initiatives.
Strategic Pillars and Growth Areas
The ROAR30 strategy is anchored on three main pillars: purpose, business at scale, and foundation. The “Purpose” pillar emphasizes humanising financial services, with a significant focus on expanding SME financing from RM60 billion to RM100 billion by September 2025, and an additional RM100 billion directed towards new-economy sectors like digital economy and advanced manufacturing.
Under “Business at Scale,” the bank intends to leverage its robust competitive position as a deeply entrenched ASEAN institution. This involves establishing regional and global leadership in key areas such as Islamic finance, wealth management, transactions and payments, and corporate and investment banking. This holistic approach is designed to unlock growth through synergies, enhance liquidity management, and boost income and profitability.
Future-Proofing and Outlook
To future-proof operations, the “Foundation” pillar includes an allocation of RM10 billion for technology investments over the next five years, averaging RM2 billion annually. While this significant investment may initially exert upward pressure on the CTI, management anticipates these costs will be offset by improvements in productivity, process re-engineering, automation, and an estimated 10% workforce attrition.
Given the bank’s proven track record, sustained asset quality improvement, and a higher share of low-cost CASA deposits, analysts view the ROAR30 targets as achievable. The target price for the stock has been raised to RM11.70, with an “Outperform” recommendation maintained, citing an attractive dividend yield of approximately 6%.
