1QFY10 RESULTS

13 November 2009

MALAYSIA
CIMB Research Report

NEUTRAL Maintained
Malayan Banking Bhd RM6.84 Target: RM7.70
Making a whole lot of cents Mkt.Cap: RM48,343m/US$14,293m
Banks

MAY MK / MBBM.KL Winson Ng Gia Yann CFA +60(3) 2084 9686 – winson.ng@cimb.com

• Above expectations. Maybank’s 1QFY6/10 net profit jumped 54.1% yoy to

RM881.8m, accounting for 28% of our full-year forecast and 31% of consensus.
The main source of the variance was a strong topline which benefited from robust
growth of non-interest income and margin expansion. We are raising FY10-12 net
earnings forecasts by 2-8% for lower NPL ratios and higher non-interest income.
This increases our target price from RM7.55 to RM7.70 which we continue to peg
to 5% premium over the DDM value. Despite the positive earnings outlook, we
remain NEUTRAL on Maybank as we believe the positives are already in the price
given its above-average CY10 P/E of 13.4x (vs. sector’s 11.4x). We prefer Public
Bank (PBK MK, Outperform) for a play on big-cap Malaysian banks.
• Topline catalysts. 1Q net earnings were primarily driven by a 54.1% yoy jump in
operating revenue. Net interest income advanced 28.7% yoy, fuelled by a 34bp
expansion in net interest margin to 2.4%. Also, non-interest income surged
130.7% yoy, buoyed by higher fee income, realised investment income and foreign
exchange gains.
• Slower loan momentum. The group recorded 4% yoy loan growth in Sep 09,
slower than the 13% yoy growth recorded three months ago. This was mainly due
to a 1.4% slippage of overseas loans. Domestic loan momentum improved slightly
from 6.5% yoy in Jun 09 to 6.8% yoy in Sep 09 (vs. 7.2% for the industry). The
pace of property loans picked up in Sep 09 but working capital loans slipped 1.8%
yoy (-0.5% yoy in Jun 09). Despite the weaker loan growth in 1Q, we believe that
our full-year forecast of 8.1% is achievable as we expect a pick-up in loan growth
in Indonesia and residential mortgages and SME loans in the domestic market.
• Improving NPL ratio. The group’s net NPL ratio improved slightly to 1.6% in Sep
09 from 1.64% in Jun 09 while loan loss coverage was stable at 113%.
• Upping earnings forecasts and target price. The absence of a dividend in 1Q is
within our expectations. We are raising our FY10-12 net earnings forecasts by 2-
8% as we (1) lower the projected net NPL ratio from 2.2-2.7% to 1.7-1.9% and (2)
increase our non-interest income forecasts by 1-3%. This lifts our target price from
RM7.55 to RM7.70, still pegged to a 5% premium over its DDM value (cost of
equity of 13.2% and dividend growth rates of 12.6% for the interim growth phase
and 6% for the long-term growth phase).

Results comparison
FYE Jun (RM m) 1QFY10 1QFY09 yoy % 4QFY09 qoq % Prev.
chg chg FY10F Comments
Net interest income 1,627.6 1,265.0 28.7 1,563.6 4.1 6,147.9 Above. Driven by margin expansion from BII.
Non-interest income 1,523.6 780.2 95.3 1,735.3 (12.2) 5,621.1 Above. Higher investment and FX income.
Total income 3,151.2 2,045.2 54.1 3,298.9 (4.5) 11,769.0 Above. Strong growth in net and non-int.
Overhead expenses (1,570.7) (1,226.5) 28.1 (1,524.4) 3.0 (5,918.8) Above. Consolidation of BII.
Pre-provision profit 1,580.5 818.7 93.0 1,774.5 (10.9) 5,850.3 Above. Strong growth in revenue.
Loan loss provisions (417.7) (185.4) 125.3 (782.5) (46.6) (1,473.3) Above. Higher SP charges.
Associates and others (6.5) 248.5 (102.6) (1,813.7) (99.6) 180.8 Below. Dragged by impairment losses.
Pretax profit 1,156.3 881.8 31.1 (821.7) 240.7 4,557.8 In line. Growth supported by higher revenue.
Tax (249.5) (311.0) (19.8) (241.9) 3.1 (1,364.0) Below. Lower effective tax rate.
Tax rate (%) 21.6 35.3 (29.4) 29.9 Below Tax credit at BII.
Minority interests (25.0) 1.4 (1,885.7) (54.5) (54.1) (72.7) Above. Higher subsidiary contributions.
Net profit 881.8 572.2 54.1 (1,118.1) 178.9 3,121.0 Above. 28% of our est and 31% of mkt.
Core net profit 881.8 541.2 62.9 612.4 44.0 3,121.0
EPS (sen) 12.5 11.7 6.3 (17.9) 169.7 44.0
Core EPS (sen) 12.5 11.1 11.8 9.8 27.3 44.0

Source: Company, CIMB Research

Please read carefully the important disclosures at the end of this publication.
 Financial summary
FYE Jun 2008 2009 2010F 2011F 2012F
Net interest income (RM m) 5,426.8 5,919.5 6,176.7 6,845.6 7,579.7
Non-interest income (RM m) 4,136.4 4,599.5 3,977.4 4,221.1 4,577.9
Total income (RM m) 9,563.2 10,519.0 11,916.9 12,988.8 14,238.5
Loan loss provisions (RM m) (810.1) (1,698.8) (1,281.5) (1,212.5) (1,056.0)
Pretax profit (RM m) 4,086.0 1,674.2 4,897.4 5,521.6 6,375.2
Net profit (RM m) 2,928.1 691.9 3,369.6 3,848.8 4,458.3
EPS (sen) 54.1 11.1 47.5 54.3 62.9
EPS growth (%) (9%) (80%) 329% 14% 16%
P/E (x) 12.6 61.7 14.4 12.6 10.9
Price chart Core EPS (sen) 59.7 34.9 47.6 54.3 62.9
7.3
2.50 Core EPS growth (%) 9% (42%) 36% 14% 16%
6.8

6.3 2.00 Core P/E (x) 11.4 19.6 14.4 12.6 10.9
5.8
1.50 Gross DPS (sen) 44.0 8.0 31.5 43.1 50.3
5.3

4.8 1.00 Dividend yield (%) 6.4% 1.2% 4.6% 6.3% 7.4%
4.3

3.8
0.50 P/BV (x) 1.9 1.9 1.8 1.6 1.5
3.3 0.00 ROE (%) 15.2% 3.1% 12.8% 13.4% 14.4%
Nov-08 Apr-09 Sep-09

Volume 10m (R.H.Scale) Malayan Banking Bhd

% change in EPS estimates 8.0% 4.2% 1.6%
CIMB/Consensus 1.17 1.14 1.10
Source: Bloomberg Source: Company, CIMB Research, Bloomberg

Conference call highlights

The information provided during yesterday’s teleconference was broadly in line with
our expectations and management’s previous guidance. Management remained
optimistic about the group’s earnings prospects, especially as 1Q performance
trumped the group’s full-year targets – 1Q ROE was 13.9% vs. 11% target for FY10
and revenue growth was 54.1% vs. a target of 8%. FY10 earnings will be underpinned
by management’s expectations of GDP growth of 4.5% for 2010 (vs. 3.5% projected
by our economic research team) and a stable interest-rate environment.

Review of overseas operations

9% rise in Singapore earnings. Maybank’s Singapore operations registered a 9%
yoy increase in 1QFY6/10 pretax profit to RM198.1m, mainly due to lower marked-to-
market losses of RM5m compared to RM17.4m a year ago. The unit boasts strong
asset quality with net NPL ratio at only 0.1% in Sep 09, down from 0.16% in Jun 09.
Strong rebound for BII. Maybank’s key Indonesian subsidiary, Bank Internasional
Indonesia (BII) racked up a net profit of RM47.4m in the quarter ended Sep 09,
reversing from a net loss of RM31.1m in the preceding quarter. Earnings for the
quarter were driven by (1) a 56.9% qoq drop in loan loss provisioning to RM90m, and
(2) a 3.6% qoq expansion in net interest income, thanks to a 0.7% qoq uptick in net
interest margin to 6.9%. Overheads were stable at RM277m but non-interest income
slid 8.6% qoq to RM157m.
Flattish bottom line for MCB Bank. MCB Bank’s net profit for the quarter, however,
was flattish at RM22.9m because of the drag from a (1) 127.2% yoy jump in provisions
due to higher loss in the value of investments, and (2) 14.4% slide in non-interest
income resulting from lower dividend income, forex income and capital gains on
investments. This offset the strong 31.1% growth in net interest income, which was
aided by an increase in yields and earnings assets. MCB Bank’s ROE remained
strong at 25% in the quarter, albeit lower than the 29% recorded a year ago.

Figure 1: Sector comparisons

Target Core 3-yr EPS P/BV ROE Div
Bloomberg Price price Mkt cap P/E (x) CAGR (x) (%) yield (%)
ticker Recom. (Local) (Local) (US$ m) CY2009 CY2010 (%) CY2009 CY2009 CY2009
Malayan Banking MAY MK N 6.84 7.70 14,293 16.5 13.4 21.7 1.8 8.4 2.9
Affin AHB MK O 2.29 2.59 994 10.8 8.8 16.5 0.7 6.9 3.1
Alliance AFG MK N 2.60 2.95 1,195 15.9 11.3 24.1 1.4 9.1 1.9
AMMB Hldgs AMM MK O 5.06 6.30 4,447 14.8 13.5 17.0 1.6 11.5 2.1
EON Capital EON MK O 5.79 6.72 1,181 10.9 8.3 58.3 1.1 10.8 2.8
Hong Leong Bank HLBK MK U 8.30 7.50 3,840 13.9 13.0 7.4 2.2 16.6 6.0
Public Bank PBK MK O 10.96 15.00 11,445 15.3 12.1 13.1 3.6 25.2 6.9
Public Bank-F PBKF MK O 10.96 15.00 11,466 15.4 12.1 13.1 3.6 25.2 6.9
RHB Cap RHBC MK O 5.42 7.00 3,451 11.9 10.3 7.4 1.4 12.1 3.4
Simple average 13.9 11.4 19.8 1.9 14.0 4.0
O = Outperform, N = Neutral, U = Underperform, TB = Trading Buy and TS = Trading Sell
Source: Company, CIMB Research

[2]
Figure 2: Quarterly profit & loss statement
FYE June (RM m) Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09
3QFY08 4QFY08 1QFY09 2QFY09 3QFY09 4QFY09 1QFY10

Interest in come 2,754.7 2,601.8 2,571.9 3,489.8 3,196.2 2,779.8 2,728.2

Interest expense (1,405.1) (1,250.8) (1,306.9) (1,942.4) (1,652.7) (1,216.2) (1,100.6)
Net interest income 1,349.6 1,351.0 1,265.0 1,547.4 1,543.5 1,563.6 1,627.6
Non-interest income 617.9 1,296.8 495.0 809.6 629.8 1,418.1 1,142.0
Islamic banking income (IBI) 267.8 273.1 285.2 301.7 323.5 317.2 381.6
Total income 2,235.3 2,920.9 2,045.2 2,658.7 2,496.8 3,298.9 3,151.2
Overhead expenses (1,065.4) (1,124.7) (1,226.5) (1,408.5) (1,409.8) (1,524.4) (1,570.8)
Pre-provision profit 1,169.9 1,796.2 818.7 1,250.2 1,087.0 1,774.5 1,580.4
Loan loss provisions (LLP) (166.3) (353.6) (185.4) (312.2) (411.9) (782.5) (417.7)
Associates' contrib and others 16.4 (423.9) 248.5 22.3 (21.2) (1,813.7) (6.5)
Others 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Exceptional items 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Pretax profit 1,020.0 1,018.7 881.8 960.3 653.9 (821.7) 1,156.2
Tax (252.6) (262.0) (311.0) (225.6) (145.0) (241.9) (249.5)
Tax rate (%) 24.8 25.7 35.3 23.5 22.2 (29.4) 21.6
Minority interests (8.8) (53.5) 1.4 (0.1) (5.6) (54.5) (24.9)
Net profit 758.6 703.2 572.2 734.6 503.3 (1,118.1) 881.8

yoy growth (%)

Interest in come 2.4% -10.4% -11.6% 16.5% 16.0% 6.8% 6.1%
Interest expense 0.5% -22.1% -18.3% 23.0% 17.6% -2.8% -15.8%
Net interest income 4.4% 4.0% -3.6% 9.4% 14.4% 15.7% 28.7%
Non-interest income -9.2% 49.4% -18.9% 27.2% 1.9% 9.4% 130.7%
Islamic banking income (IBI) 41.6% 39.6% 36.1% 40.8% 20.8% 16.1% 33.8%
Total income 3.3% 23.6% -4.0% 17.4% 11.7% 12.9% 54.1%
Overhead expenses 13.8% 14.9% 21.5% 33.6% 32.3% 35.5% 28.1%
Pre-provision profit -4.7% 29.8% -27.1% 3.2% -7.1% -1.2% 93.0%
Loan loss provisions (LLP) -14.7% 655.6% 71.5% 75.8% 147.7% 121.3% 125.3%
Pretax profit -0.8% -23.5% -13.0% -7.1% -35.9% -180.7% 31.1%
Tax -2.0% -0.5% 18.6% -26.5% -42.6% -7.7% -19.8%
Minority interests 51.7% 252.0% -108.5% -102.1% -36.4% 1.9% -1878.6%
Net profit -0.8% -33.2% -22.2% 0.5% -33.7% -259.0% 54.1%

Key ratios (%)

Annualised ROE 15.6% 14.6% 11.5% 14.8% 10.0% -20.2% 15.4%
Annualised ROA 1.2% 1.1% 0.8% 1.0% 0.7% -1.5% 1.1%
Annualised net interest margin 2.39% 2.31% 2.05% 2.48% 2.46% 2.45% 2.39%
Annualised non-interest income ratio 27.6% 44.4% 24.2% 30.5% 25.2% 43.0% 36.2%
IBI over total revenue 12.0% 9.3% 13.9% 11.3% 13.0% 9.6% 12.1%
Cost-to-income ratio 47.7% 38.5% 60.0% 53.0% 56.5% 46.2% 49.8%
LLP over gross interest income 6.0% 13.6% 7.2% 8.9% 12.9% 28.1% 15.3%
Source: Company

1Q results comments
1QFY10 net profit jumped 54.1% yoy to RM881.8m, partly due to the consolidation of
its subsidiary in Indonesia, Bank Internasional Indonesia (BII), which recorded a net
profit of RM47.4m in the quarter. This helped operating revenue surge 54.1% yoy to
RM3.15bn, faster than the 28.1% expansion in overheads. Consolidation of BII also
helped the group to achieve a 34bp expansion in net interest margin to 2.4%, spurring
net interest income 28.1% yoy higher to RM1.63bn. 1Q non-interest income jumped
130.7% yoy to RM1.14bn, buoyed by (1) a 35.7% rise in fee-based income, (2)
realised investment gains of RM92.7m vs. a net loss of RM0.2m a year ago, and (3)
foreign exchange gains of RM107.7m, a reversal from a loss of RM125.2m in
1QFY09. Even if we were to exclude BII, the group’s non-interest income would also
have doubled.
Due to the consolidation of BII, the group’s overheads also increased 28.1% yoy to
RM1.57bn in 1QFY10 due to hikes in personnel costs (+20.9% yoy), establishment
costs (+45.7%) and administrative expenses (+55.8%). Excluding BII, Maybank’s
overheads would have increased by only 5.5% yoy. Meanwhile, loan loss provisioning
shot up 125.3% yoy to RM417.7m, primarily lifted by a 94.2% jump in specific
provision charges.

[ 3 ]
Figure 3: Quarterly balance sheet
Balance Sheet (RM'm) Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09

Cash and short-term funds 33,771.3 27,644.4 27,435.6 22,734.6 23,368.1 23,608.0 24,232.0
Deposits with other FI's 10,741.5 8,956.5 6,829.3 4,145.8 6,778.1 6,299.2 7,486.4
Securities purchased under resale agreement 31.3 0.0 30.3 0.0 268.1 346.5 77.7
Securities held-for-trading 1,949.7 880.8 2,210.7 2,367.6 1,539.2 1,489.3 2,526.4
Securities available-for-sale (Dealing securities) 32,902.2 34,484.1 43,055.5 47,828.5 47,780.3 47,877.1 46,061.7
Securities held-to-maturity (Investment securities) 1,024.7 1,186.2 1,215.6 1,867.0 4,417.4 8,360.8 8,484.3
Loans,advances and financing 151,596.9 164,614.2 184,299.8 182,575.4 185,938.7 185,783.1 190,907.4
Other assets 4,526.4 4,935.3 7,349.0 6,835.0 6,801.5 6,249.6 6,567.7
Intangible assets 196.5 189.7 3,147.7 6,207.1 6,256.1 4,374.0 4,561.8
Statutory deposits 4,656.5 5,872.4 6,807.1 5,405.2 3,488.7 4,050.9 4,044.3
Investment in associates 44.5 2,218.8 3,031.3 3,041.5 3,054.6 2,630.1 2,660.1
Property and equipment 1,191.4 1,210.8 1,529.0 1,477.6 1,481.2 1,395.5 1,383.6
Deferred tax assets 893.8 1,217.5 1,299.2 1,122.3 1,300.6 1,493.1 1,430.1
Life , general takaful fund 15,349.4 15,690.0 16,157.6 16,098.7 16,296.5 16,781.9 16,617.1
TOTAL ASSETS 258,876.1 269,100.7 304,397.7 301,706.3 308,769.1 310,739.1 317,040.6

Deposits from customers 185,202.4 187,112.1 204,946.3 206,592.9 211,724.2 212,598.6 218,764.6
Deposits from other FI's 21,453.1 23,136.9 32,707.2 29,154.6 30,906.3 28,781.9 26,444.6
Oblig atio ns on repurchase agreement securities 114.3 322.4 879.0 0.0 0.0 0.0 178.0
Bill and acceptances payable 3,142.3 4,792.3 5,486.3 3,712.4 2,634.9 1,470.1 1,449.1
Other li abilities 6,269.7 6,303.7 9,629.0 9,349.9 9,132.0 8,445.1 9,288.1
Recourse obligations to lo ans sold to Cagamas 1,369.6 1,274.1 820.5 759.8 291.1 516.3 491.1
Provision for taxation and zakat 525.1 435.5 399.6 232.8 199.0 87.7 109.1
Deferred tax liabil it ies 64.7 51.9 52.3 49.5 52.0 57.4 49.1
Subordinated obligations 4,953.1 9,890.2 11,611.3 14,679.8 16,100.5 16,232.2 16,813.9
Life , general takaful fund li abilities 3,997.0 4,032.8 4,061.0 4,000.2 4,009.5 4,530.0 4,426.1
Life , general takaful fund 11,352.4 11,657.1 12,096.6 12,098.4 12,287.0 12,251.9 12,191.0
TOTAL LIABILITIES 238,443.7 249,009.0 282,689.1 280,630.3 287,336.5 284,971.2 290,204.7

Share capital 4,881.0 4,881.1 4,881.1 4,881.1 4,881.2 7,077.7 7,078.0

Reserves 14,870.1 14,421.4 15,056.1 15,348.0 15,700.5 17,821.1 18,881.1
SHF 19,751.1 19,302.5 19,937.2 20,229.1 20,581.7 24,898.8 25,959.1
Minority Interest 681.3 789.3 1,771.3 846.9 850.8 869.2 876.8
TOTAL LIABILITIES AND SHF 258,876.1 269,100.8 304,397.6 301,706.3 308,769.0 310,739.2 317,040.6

Interest earnin gs assets 232,017.6 237,766.2 265,076.8 261,518.9 270,089.9 273,764.0 279,775.9
Interest-paying liabilitie s 214,865.2 225,253.9 255,630.1 254,139.7 261,365.9 259,082.8 263,650.2

Loan to deposit ratio 81.9% 88.0% 89.9% 88.4% 87.8% 87.4% 87.3%
Source: Company

Total deposits advanced by 6.7% yoy to RM218.8bn in Sep 09, faster than the 3.6%
yoy expansion in net loans to RM190.9bn. Consequently, the loan-to-deposit ratio
declined from 89.9% a year ago to 87.3% in Sep 09, higher than the industry’s 78.9%.

[ 4 ]
Figure 4-1: Breakdown of domestic loans
Loans (RM 'm) (FYE Jun) 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10

Sectorial breakdown of loans in Malaysia

Construction 5,456.5 5,313.9 5,541.4 5,866.5 6,300.2 6,456.8
Residential mortgages 23,907.1 24,134.2 24,254.5 24,242.8 24,334.4 24,948.6
Non-residentia l mortgages 6,429.5 6,382.1 6,493.6 6,518.5 6,493.3 6,610.5
Purchase of securities 10,336.7 10,358.9 10,384.3 10,492.0 11,437.5 11,835.7
Auto loans 17,182.1 17,919.0 18,082.1 18,796.6 19,576.0 20,135.3
Purchase of fixed assets 3.8 3.5 3.3 3.3 3.3 3.3
Personal use 3,326.4 3,383.7 3,443.7 3,528.5 3,782.8 4,000.2
Credit card 3,196.1 3,318.2 3,570.4 3,570.7 3,556.9 3,651.5
Purchase of consumer durables 12.3 14.3 16.0 16.1 15.7 17.0
Working capital 51,271.9 52,954.9 50,838.7 52,901.4 51,005.7 52,011.9
Others 943.5 859.3 3,317.4 3,440.8 3,438.5 3,439.8
TOTAL 122,065.9 124,642.0 125,945.4 129,377.2 129,944.3 133,110.6

Sectorial breakdown of loans (%) (domestic loans)

Construction 4.5% 4.3% 4.4% 4.5% 4.8% 4.9%
Residential mortgages 19.6% 19.4% 19.3% 18.7% 18.7% 18.7%
Non-residentia l mortgages 5.3% 5.1% 5.2% 5.0% 5.0% 5.0%
Purchase of securities 8.5% 8.3% 8.2% 8.1% 8.8% 8.9%
Auto loans 14.1% 14.4% 14.4% 14.5% 15.1% 15.1%
Purchase of fixed assets 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Personal use 2.7% 2.7% 2.7% 2.7% 2.9% 3.0%
Credit card 2.6% 2.7% 2.8% 2.8% 2.7% 2.7%
Purchase of consumer durables 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Working capital 42.0% 42.5% 40.4% 40.9% 39.3% 39.1%
Others 0.8% 0.7% 2.6% 2.7% 2.6% 2.6%
TOTAL 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
As % of total loans 71.3% 65.2% 66.5% 67.1% 67.2% 67.0%

y-o-y growth rate

Construction -1.6% -1.4% 5.6% 6.9% 15.5% 21.5%
Residential mortgages -1.3% -1.2% -0.8% 0.8% 1.8% 3.4%
Non-residentia l mortgages 2.0% 2.4% 2.4% 1.5% 1.0% 3.6%
Purchase of securities 10.7% 6.2% 5.3% 4.2% 10.6% 14.3%
Auto loans 31.4% 30.2% 28.5% 26.6% 13.9% 12.4%
Purchase of fixed assets 11.8% 66.7% -38.9% -26.7% -13.2% -5.7%
Personal use 6.0% 5.4% 5.2% 6.9% 13.7% 18.2%
Credit card 21.4% 20.9% 21.0% 21.0% 11.3% 10.0%
Purchase of consumer durables -75.5% -81.0% -4.8% -31.2% 27.6% 18.9%
Working capital 18.3% 23.0% 14.5% 17.3% -0.5% -1.8%
Others -24.5% -33.6% 89.2% 103.3% 264.4% 300.3%
TOTAL 12.1% 13.4% 12.1% 13.6% 6.5% 6.8%

Source: Company

Domestic loan growth improved slightly from 6.5% yoy in Jun 09 to 6.8% yoy in Sep
09. But the rate was lower than the 12-14% registered between Jun 08 and Mar 09.
We are positive about the improved momentum for property loans – the pace for
residential and non-residential mortgages strengthened from 1-2% yoy in Jun 09 to 3-
4% yoy in Sep 09. Growth of construction loans also accelerated from 15.5% to 21.5%
in the same period. However, a few loan segments show moderating trends, including
auto loans (from +13.9% yoy in Jun 09 to +12.4% yoy in Sep 09), working capital
loans (from -0.5% to -1.8%) and credit card receivables (from +11.3% to +10%).

[ 5 ]
Figure 4-2: Breakdown of overseas loans
Overseas Operations: - 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10
Singapore 36,976.7 38,369.4 38,508.3 38,843.0 39,269.7 40,854.1
Labuan Offshore 3,803.6 4,064.2 3,713.5 3,601.3 3,127.6 3,204.1
USA 1,230.6 1,339.0 1,477.2 1,452.9 1,339.2 1,279.7
UK 1,291.9 1,324.1 1,238.3 1,309.3 1,281.0 1,244.7
Hong Kong 2,725.8 2,971.9 3,005.1 3,132.4 2,892.4 2,856.5
Brunei 155.3 120.2 121.6 127.8 130.6 147.4
Vietnam 547.2 626.9 577.2 561.5 548.0 585.5
Cambodia 174.8 216.8 241.0 256.2 302.5 266.7
Papau New Guinea 49.4 54.4 67.8 64.9 66.4 66.5
Philippines 766.2 831.7 891.9 903.8 793.5 771.9
Indonesia 196.8 15,418.4 12,363.6 11,955.7 12,417.7 13,270.8
Bahrain 371.9 412.4 420.5 439.8 280.6 268.8
China 799.4 831.9 815.5 851.5 969.3 855.9
TOTAL 49,089.6 66,581.3 63,441.5 63,500.1 63,418.5 65,672.6
GRAND TOTAL 171,155.5 191,223.3 189,386.9 192,877.3 193,362.8 198,783.2

Breakdown of loans (%) over total loans

Singapore 21.6% 20.1% 20.3% 20.1% 20.3% 20.6%
Labuan Offshore 2.2% 2.1% 2.0% 1.9% 1.6% 1.6%
USA 0.7% 0.7% 0.8% 0.8% 0.7% 0.6%
UK 0.8% 0.7% 0.7% 0.7% 0.7% 0.6%
Hong Kong 1.6% 1.6% 1.6% 1.6% 1.5% 1.4%
Brunei 0.1% 0.1% 0.1% 0.1% 0.1% 0.1%
Vietnam 0.3% 0.3% 0.3% 0.3% 0.3% 0.3%
Cambodia 0.1% 0.1% 0.1% 0.1% 0.2% 0.1%
Papau New Guinea 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Philippines 0.4% 0.4% 0.5% 0.5% 0.4% 0.4%
Indonesia 0.1% 8.1% 6.5% 6.2% 6.4% 6.7%
Bahrain 0.2% 0.2% 0.2% 0.2% 0.1% 0.1%
China 0.5% 0.4% 0.4% 0.4% 0.5% 0.4%
TOTAL 28.7% 34.8% 33.5% 32.9% 32.8% 33.0%

y-o-y growth of overseas loans

Singapore 31.9% 26.9% 19.9% 16.9% 6.2% 6.5%
Labuan Offshore -0.3% 10.0% 7.5% 9.0% -17.8% -21.2%
USA 1.0% 9.8% 32.0% 15.8% 8.8% -4.4%
UK 49.1% 33.5% 12.1% 3.2% -0.8% -6.0%
Hong Kong 25.3% 29.8% 21.4% 21.3% 6.1% -3.9%
Brunei -4.8% -23.2% -24.6% -19.1% -15.9% 22.6%
Vietnam 39.8% 56.2% 34.3% 29.9% 0.1% -6.6%
Cambodia 67.8% 124.0% 125.9% 112.1% 73.1% 23.0%
Papau New Guinea 66.3% 92.9% 85.2% 33.5% 34.4% 22.2%
Philippines 12.3% 17.5% 15.1% 20.4% 3.6% -7.2%
Indonesia 124.1% 15994.4% 10754.8% 15326.7% 6209.8% -13.9%
Bahrain 15.1% 13.9% 28.3% 21.6% -24.5% -34.8%
China 14.8% 9.7% 11.8% 11.3% 21.3% 2.9%
TOTAL 27.2% 62.3% 47.7% 43.2% 29.2% -1.4%

Source: Company

Although Maybank’s overseas loan base advanced 3.6% qoq, it shrank 1.4% on yoy
basis to RM65.7bn as at end-Sep 09. The main drag was the 21.2 % yoy drop in
Labuan, without which overseas loans would have been virtually unchanged yoy.
Loans in Singapore, which accounted for the largest share (62.2%) of overseas loans
expanded 6.5% yoy in Sep 09 (vs. 6.2% yoy in Jun 09) while loans for the second
largest foreign operations, i.e. Indonesia (about 20.2% of overseas loans) dropped
13.9% yoy. However, the Indonesian loan base has been recovering qoq, expanding
4-7% qoq in the past two quarters. Overall, overseas loans accounted for 33% of the
group’s total loans in Sep 09, down from 34.8% a year ago.

[ 6 ]
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RECOMMENDATION FRAMEWORK #1*

STOCK RECOMMENDATIONS SECTOR RECOMMENDATIONS

OUTPERFORM: The stock's total return is expected to exceed a relevant
benchmark's total return by 5% or more over the next 12 months.
NEUTRAL: The stock's total return is expected to be within +/-5% of a relevant
benchmark's total return.
UNDERPERFORM: The stock's total return is expected to be below a relevant
benchmark's total return by 5% or more over the next 12 months.
TRADING BUY: The stock's total return is expected to exceed a relevant
benchmark's total return by 5% or more over the next 3 months.
TRADING SELL: The stock's total return is expected to be below a relevant
benchmark's total return by 5% or more over the next 3 months.
OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is
expected to outperform the relevant primary market index over the next 12
months.
NEUTRAL: The industry, as defined by the analyst's coverage universe, is
expected to perform in line with the relevant primary market index over the next
12 months.
UNDERWEIGHT: The industry, as defined by the analyst's coverage universe,
is expected to underperform the relevant primary market index over the next 12
months.
TRADING BUY: The industry, as defined by the analyst's coverage universe, is
expected to outperform the relevant primary market index over the next 3
months.
TRADING SELL: The industry, as defined by the analyst's coverage universe,
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)

[ 8 ]
 RECOMMENDATION FRAMEWORK #2 **

STOCK RECOMMENDATIONS SECTOR RECOMMENDATIONS

OUTPERFORM: Expected positive total returns of 15% or more over the next OVERWEIGHT: The industry, as defined by the analyst's coverage universe,
12 months. has a high number of stocks that are expected to have total returns of +15% or
better over the next 12 months.
NEUTRAL: Expected total returns of between -15% and +15% over the next NEUTRAL: The industry, as defined by the analyst's coverage universe, has
12 months. either (i) an equal number of stocks that are expected to have total returns of
+15% (or better) or -15% (or worse), or (ii) stocks that are predominantly
expected to have total returns that will range from +15% to -15%; both over the
next 12 months.
UNDERPERFORM: Expected negative total returns of 15% or more over the UNDERWEIGHT: The industry, as defined by the analyst's coverage universe,
next 12 months. has a high number of stocks that are expected to have total returns of -15% or
worse over the next 12 months.
TRADING BUY: Expected positive total returns of 15% or more over the next 3 TRADING BUY: The industry, as defined by the analyst's coverage universe,
months. has a high number of stocks that are expected to have total returns of +15% or
better over the next 3 months.
TRADING SELL: Expected negative total returns of 15% or more over the next TRADING SELL: The industry, as defined by the analyst's coverage universe,
3 months. has a high number of stocks that are expected to have total returns of -15% or
worse over the next 3 months.

** This framework only applies to stocks listed on the Hong Kong Stock Exchange and China listings on the Singapore 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.

[ 9 ]