Maybank's NIMs see hope in 2H14F

After an unexpectedly weaker 1H14 performance.

In 1H14, Malayan Banking's (Maybank) NIMs were weaker than expected partly owing to a challenging macro environment in Indonesia, where NIMs fell by ~60bp due to stiff competition for deposits from midsized franchises like BII.

According to a research note from Nomura, another reason was the downward repricing of the mortgage portfolio. The average yield on Maybank’s mortgage book is 4.9-5.0% vs. new bookings at ~4.3% (prior to the rate hike).

Rounding up the reasons were strong loan growth in Singapore (19%) where NIMs are low, and competition for deposits in Malaysia just prior to the OPR hike in July.

Following the OPR hike, Maybank took the opportunity to raise lending rates by 25bp while deposit rates moved up at a slower pace of 15bp.

Encouragingly, since the interest rate hike, management has yet to see any visible signs of a slow-down in the consumer segment.

Meanwhile, for Indonesia, Nomura expects NIMs to be stable in the second-half of the year as lending rates were repriced higher towards end-1H, while deposit competition has not intensified further.