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3 Things Investors Should Know About Malaysia’s Largest Bank Malayan Banking Berhad

There are really only three banks in Singapore’s stock market, namely, DBS Group Holdings Ltd (SGX: D05), Oversea-Chinese Banking Corp Limited (SGX: O39), and United Overseas Bank Ltd (SGX: U11).

Across the causeway from Singapore though, there are many other banks listed in Malaysia’s stock market, Bursa Malaysia. One such bank is Malayan Banking Berhad (KLSE: 1155.KL).

Here are three pieces of information about Malayan Banking that investors may find useful:

1. It’s a significant player in Malaysia and South East Asia

Malayan Banking, popularly known as Maybank, is Malaysia’s largest bank by market capitalisation as well as total assets. The two numbers currently stand at RM82 billion and RMB702 billion, respectively. The bank is also one of the largest banks in Southeast Asia given that its asset base translates to a hefty US$181 billion.

For further perspective, Maybank’s market capitalisation of RM79 billion is equivalent to around S$27 billion. DBS, OCBC, and UOB have market capitalisations of S$38.6 billion, S$35.1 billion and S$28 billion, respectively.

2. Its dividend policy and dividend history

Maybank has a long-term dividend policy of paying out 40% to 60% of its net profit each year as a dividend.

The bank has also managed to pay an annual dividend over its last 10 fiscal years. In other words, it has paid a dividend too during the 2007-09 financial crisis. That said, Maybank’s dividend did drop drastically from RM0.45 per share in its fiscal year ended 30 June 2008 to just RM0.08 in the fiscal year ended 30 June 2009.

The good thing for the bank’s investors is that its dividend has since recovered. In the company’s latest fiscal year ended 31 December 2015 (Maybank changed its fiscal year end from June to December a few years ago), its dividend was RM0.54 per share.

At Maybank’s current share price of RM 8.17, it has a dividend yield of 6.6% thanks to its 2015 dividend.

3. It has a low valuation in relation to history

Maybank is currently trading at 1.3 times its book value. While that’s higher than the three Singapore banks (the trio have price-to-book ratios that range from 0.93 to 0.98), Maybank’s valuation is still very much near a five-year low as the chart below shows:

Maybank price-to-book (PB) ratio since 29 June 2011
Source: S&P Global Market Intelligence

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.