Etiqa, the insurance and takaful arm of Malaysia’s Maybank, has strong potential for growth in its overseas markets of Singapore, Indonesia, and the Philippines, CIMB Equities Research said.
The research firm said that Maybank’s strong footholds in commercial banking in these markets can be leveraged to grow its insurance business, according to a report by The Star.
“It has shown positive results in this regard as out of Etiqa’s gross premium of MYR6.2 billion (US$1.49 billion) in 2017, MYR900 million (US$216.3 million) was generated from Singapore and MYR200 million (US$48 million) from the Philippines,” a research note said.
Etiqa was recently recognised as one of the most digitally innovative insurers in Singapore, reflecting its heavy investments in digital technology over the past few years.
However, the strong potential of its insurance business is partly offset by stagnation in Maybank’s core business of banking.
“While we are positive on the growth prospects for Maybank’s insurance, as well as Islamic banking businesses, we think that these could be partly offset by the weak expansion of its commercial banking operations, impacted by slow loan growth and margin erosion,” CIMB Equities Research said. “As such, we continue to rate Maybank a ‘Hold’, partly premised on its attractive dividend yield of a projected 5.9% in FY19F. We prefer RHB Bank for exposure to Malaysian banks.”