This article first appeared in The Edge Malaysia Weekly on February 24, 2025 - March 2, 2025

THE unexpected exit of Malayan Banking Bhd (KL:MAYBANK)’s group CFO last week has left investors with more questions than answers.

In a rare move for a bank, Maybank — the country’s largest banking group by assets — announced in a bourse filing after market close on Monday (Feb 17) the immediate departure of its group chief financial officer (CFO) Khalijah Ismail, following “an internal inquiry by the bank”. No other details were provided.

Khalijah, who is understood to turn 60 next year, said in a statement that same day that while Maybank framed her departure as a result of an internal inquiry, it was, in fact, a termination.

Khalijah, who has been with the bank for over 33 years, including three years and just over four months as group CFO, said she would take legal action to challenge the bank’s decision and protect her reputation.

“No specific reasons were given for my termination, other than a claim that the bank had lost trust and confidence in me. I categorically deny any wrongdoing,” she said.

Given the suddenness of it all and lack of details surrounding the inquiry, the rumour mill went into overdrive.

To quell fears, Maybank held an early morning online briefing with analysts on Feb 18. While the bank did not provide the exact reasons for Khalijah’s termination, it shared that it was the result of non-compliance with internal requirements and processes.

“According to the group, Khalijah was given an opportunity to present her case, and upon completion of the inquiry, Maybank decided to terminate her employment,” CIMB Securities says in a Feb 18 note.

According to analysts, Maybank made clear four things: (1) there was no falsification of accounts; (2) there were no financial losses suffered as a result of this incident; (3) the investigation was not triggered by any law enforcement agency; and (4) there would be no change to the bank’s earlier guidance on its financial performance, including on dividend policy.

Despite the lack of specifics, investors seemed assured by the fact that there would be no financial implications. Maybank’s share price, which initially fell 1.9% to as low as RM10.36 a day after its announcement of Khalijah’s departure, recovered soon after to close at RM10.54 — just two sen lower than in the previous day.

The stock then fell for a third straight day on Feb 20 (Thursday), closing at RM10.44, before improving by 6 sen or 0.6% to RM10.50 on Feb 21. At that price, Maybank had a market value of RM126.7 billion.

Analysts have made no changes to their investment calls on Maybank. Bloomberg data as at Feb 21 showed 14 “buy”, five “hold” and two “sell” calls on the stock. The average 12-month target price was RM11.30, suggesting further upside.

“While we understand that more specific details cannot be shared due to the matter potentially going through litigation, we are comforted by management’s assurance during the call that there will be no change to guidance regarding financial performance as a result of this change,” a foreign research house says in a Feb 18 report. It has kept its “buy” call on Maybank.

CGS International, in a report on the same day, says it believes the development at Maybank is “an isolated case” and does not think it will have a material impact on the bank’s operations and earnings outlook.

Still, many questions remain as to what really happened, as the sudden removal of a bank CFO — often considered the second highest-ranking management executive after the CEO — is no small matter.

All eyes will be on Maybank president and group CEO Datuk Khairussaleh Ramli at the bank’s 4QFY2024 financial results briefing this Wednesday (Feb 26) afternoon to see if he reveals more.

Khalijah, who joined Maybank in 1991, became the group CFO in October 2021 after her predecessor Datuk Amirul Feisal Wan Zahir resigned to become the managing director of Khazanah Nasional Bhd.

She has served in various roles within the group, including treasury operations, corporate and investment banking, and international operations, and managed group-wide transformation programmes for the bank. According to Maybank’s 2023 annual report, she was a director of Maybank (Cambodia) Plc and Maybank Ageas Holdings Bhd.

Last year, Khalijah was ranked 55th in Fortune’s Most Powerful Women in Asia list.

Maybank says it has already begun searching for a new group CFO. In the meantime, it has appointed Malique Firdauz Ahmad Sidique — the CFO of Maybank Islamic Bhd — as acting group CFO, effective Feb 17.

Some analysts believe the removal of a key bank executive raises some concerns about Maybank’s governance standards.

“Beyond internal governance concerns, we find that this departure comes at a challenging time for Maybank, especially given the recent regulatory scrutiny it has faced,” TA Research says in a Feb 18 report.

It cites as an example the RM4.32 million administrative penalty that Bank Negara Malaysia imposed on Maybank and its Islamic banking arm in August last year for prolonged service disruptions. 

“These incidents could collectively raise Maybank’s reputational risk. While the bank has reportedly implemented corrective measures — including IT system enhancements, improved validation processes, and staff training — this latest event may further erode public and investor confidence,” TA Research says.

While it has slightly lowered its internal ESG (environmental, social and governance) scoring for Maybank on the governance front, it has nevertheless maintained its earnings estimates for the group, while keeping the stock on “buy”, with a target price of RM12.15.

RHB Research, in a note to clients on Maybank early last week, says: “While the financial impact from this looks minimal (apart from any potential outcome from legal cases), this latest incident may cast a negative light on the group given the changes in top level management in recent years. Near term, though, any potential share price weakness could be cushioned by the upcoming dividend announcement.”

The research house expects Maybank to announce a dividend per share (DPS) of 34 sen along with its 4QFY2024 results, which would take its full-year DPS to 63 sen, for a potential payout ratio of 76%. Maybank paid 60 sen DPS for FY2023, a payout ratio of 77.4%.

“Full cash DPS is expected but given the lower-than-expected payout of 70% in 1HFY2024, there is a risk the full-year payout could be below our forecast,” RHB Research says in a Feb 12 report on the sector.

CGS International is anticipating that Maybank’s FY2024 net profit would grow 11.6% to RM10.44 billion, from RM9.35 billion in FY2023.

“We reiterate our ‘add’ call on Maybank in view of potential write-backs of its management overlay (which stood at RM1.7 billion at end-September 2024) and our expectation for an improved outlook for its net interest margin. These are also potential re-rating catalysts for its share price. The stock is supported by attractive dividend yields of 5.8% for FY2024 and 6.1% for FY2025,” it adds. 

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