Datuk Seri Abdul Wahid Omar's departure as president and CEO of Malayan Banking Bhd (Maybank), the country's largest bank by assets, is likely to cast a shadow over the stock in the short term but the longer-term impact would not be significant, said analysts.
Prime Minister Datuk Seri Najib Abdul Razak had on Wednesday announced Abdul Wahid is taking on a new role as Minister in the Prime Minister's Department. It is understood that Abdul Wahid will be with Maybank until end of this month or early June.
"The news came as a negative surprise to us as Abdul Wahid did not indicate any intention to hold a government position," said CIMB Research analyst Winson Ng in a note to clients yesterday.
"In our view, it would create negative sentiment on the stock in the short term given the positive changes Abdul Wahid has brought to Maybank and possible uncertainty due to the change in CEO," he added.
In the transition period, Ng believes the bank is likely to be run by an acting CEO or a committee reporting directly to the board of directors.
"It is still unclear who will succeed Abdul Wahid, but we see the possibility of a new hire from outside Maybank."
Nevertheless, Ng does not expect the change of guard to have a significant impact on Maybank stock in the longer term as Abdul Wahid has built up a strong management team and momentum for transformation since he took over in 2008.
"In fact, the revamp has reaped the group some benefits in loan growth and the investment banking business.
"We believe the new CEO will build on his achievements and stick to Maybank's core objective of being the regional player in the financial market," said Ng.
He is advising investors to stay invested in Maybank given its rapid growth in Indonesia, the regional expansion of its investment banking business and the benefits from the implementation of the Economic Transformation Programme (ETP).
"We see any share price pullback due to the (latest) development as buying opportunities in the stock," Ng added, maintaining an "outperform" rating on Maybank at RM10.14, with a revised target price of RM12.10 from RM10.80 previously as the overhang from the 13th general election (GE) has been withdrawn.
For RHB Research Institute Sdn Bhd analyst David Chong, he does not expect Abdul Wahid's departure to have a significant impact on Maybank's operations in the near term as the group already has in place an experienced management team to cope with the departure and handle the daily operations.
"Furthermore, we believe 2013 earnings remain well supported by the group's existing loan and capital market pipelines.
"Beyond that, much would depend on the direction set by the successor, although we think this may just involve some fine-tuning given that the building blocks are already in place," said Chong.
Describing Abdul Wahid's tenure at Maybank as a "job well done", Chong said Abdul Wahid has led Maybank through a transformation programme in 2010, which saw, among others, Maybank regaining market share in the retail and small and medium enterprise segments, and becoming more visible in the investment and wholesale banking space.
Pending Maybank's first-quarter 2013 results next week, RHB is maintaining a "buy" call on the stock and fair value of RM10.95 as Maybank being an excellent proxy to ETP activities and would benefit from the pick-up in business lending activities now that
the GE overhang has been lifted.
the GE overhang has been lifted.
The Sundaily
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