MAYBANK: Strategic Vision and Robust Performance Drive Upgraded Target Price

A leading investment bank recently unveiled its ambitious new five-year strategy, dubbed ROAR30, at a recent Investor Day, signaling a significant pivot towards accelerated growth and enhanced capabilities. The strategic roadmap, which extends to 2030, builds upon the foundational success of its earlier M25+ strategy while setting more demanding financial targets. Analysts from TA SECURITIES have maintained their “BUY” recommendation and raised the target price to RM12.40 from RM11.40, reflecting confidence in the bank’s strategic direction and robust performance.

Performance Review and M25+ Progress

The group demonstrated encouraging progress under its M25+ strategy, with the Return on Equity (ROE) for the first nine months of FY2025 reaching 11.5%, comfortably within its targeted range of 11-12%. Significant achievements were noted in sustainability efforts, with RM156.32 billion mobilized in sustainable finance, substantially exceeding the original 2025 goal of RM80 billion. The bank also achieved all four sustainability commitments, leading to an MSCI ESG rating upgrade from AA to AAA, and saw digital customer penetration rise to 79%, nearing its 80% target.

Asset quality also saw improvement, characterized by a reduced credit charge-off of 11 basis points for 9M FY2025, low gross impaired loans of 1.32% (compared to 2.23% in 2020), and healthy loan loss coverage exceeding 110%. Despite these strengths, some M25+ metrics tracked behind targets, most notably the Cost-to-Income Ratio (CIR) at 48.9% against a target of approximately 45% by 2025. Loan growth, at 2.6% on a YTD annualised basis, also lagged the targeted 7% CAGR, as did overseas income growth.

Introducing ROAR30: A Step-Up in Ambition

The new ROAR30 strategy marks a clear step-up in ambition, emphasizing scaling the franchise, deepening regional relevance, and embedding long-term sustainability. Key financial targets for 2030 include a higher aspirational ROE of 13-14%, an operating income CAGR of 5-6%, and a core fee income CAGR of 6-7%. The strategy also targets a CIR below 47% by 2030, to be achieved through continued technology investments and cost optimization initiatives. A significant increase in technology investment, with RM10 billion earmarked over the next five years (up from RM3.5-4.5 billion under M25+), underscores the commitment to core system modernization, data, AI capabilities, and digital asset platforms.

Further targets include lifting the Current Account Savings Account (CASA) ratio above 41% (from around 39%), sustaining Net Interest Margin above 2.05%, and maintaining a stable net credit cost of around 20 basis points.

Valuation and Recommendation

TA SECURITIES has chosen to maintain its earnings estimates for now. However, the target price has been uplifted to RM12.40, primarily due to an adjustment in the risk-free rate assumption to 3.5%. The valuation is derived using the Gordon Growth Model, implying a Price-to-Book Value (PBV) of approximately 1.45x. The firm reiterated its “BUY” recommendation, reflecting confidence in the bank’s ability to achieve its 2030 financial targets, supported by its scale, strong domestic franchises, and strategic focus on higher-return, fee-driven businesses. Key downside risks highlighted include geopolitical uncertainties, intensifying competition, and evolving customer behavior, which could impact growth momentum and execution outcomes.