KUALA LUMPUR (August 4): Malayan Banking Bhd (KL:MAYBANK) may be paying top dollar for the full control of its insurance arm in a deal that could take the lustre off its dividends, analysts said.
While the planned acquisition would immediately boost earnings of the country’s biggest bank by assets, the company will be paying twice the book value, above its listed peers and average insurance deals over the past five years, according to AmInvestment Bank.
“While we acknowledge the merits… our main reservations centre on its frothy valuations and near-term capital drag,” the research house said, noting that many of the initiatives outlined could be pursued under existing structure, making full control a “nice-to-have than a necessity.”
On Monday, the bank also known as Maybank announced that it is acquiring the remaining 30.95% in Maybank Ageas Holdings Bhd, the holding company of its Etiqa insurance business, for RM4.83 billion from Belgian insurer Ageas SA.
Etiqa operates in Malaysia and Singapore, offering life and general insurance as well as family and general takaful products through multiple distribution channels.
“We are overall neutral on this deal,” said Kenanga Investment Bank.
The deal takes “the gloss off slightly from Maybank’s dividend appeal,” the research house said, pointing to a decline in common equity tier-1 ratio — a key measure of a bank’s financial strength and ability to absorb losses — by about two percentage-points.
Further, Maybank will need to draw on a dividend reinvestment plan in 2026 which could signal limited upside surprises in dividends in the near term, Kenanga added.