AmInvestment Deems Malaysian Banking Sector ‘Overweight’ As Loan Growth Accelerates | Money

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Buildings housing HSBC Bank and Maybank are seen in Kuala Lumpur on November 3, 2020. – Photo by Hari Anggara

KUALA LUMPUR, November 1 – AmInvestment Bank Research maintained its call for “overweighting” in the local banking sector as loan growth accelerated after the foreclosure.

In a research note released today, he said the appeal was based on industry lending growth, which reached 2.9% year-on-year (year-on-year) in September 2021, thanks to stronger growth in working capital loans for businesses.

Growth in loans to households, meanwhile, slowed further to 3.2% yoy in September 2021, while growth in household loans climbed to 2.6% yoy with a more sustained pace of working capital loans.

“We maintain our overweight position in the sector with our main purchases on RHB Bank with a fair value (FV) of RM 6.80 per share, Maybank (FV RM 9.90 / share) and CIMB Group (FV RM 5.80 / action).

“On Alliance Bank, we are deferring our valuation to FY2023 and increasing our FV to RM 3.60 per share from RM 2.90,” he said.

The research firm does not expect any change in the overnight key rate (OPR) to 1.75 percent at the next Monetary Policy Committee meeting on Wednesday.

“We continued to expect the OPR to be held at 1.75% for the remainder of 2021 with the likelihood of a 25 basis point (bp) rate hike in the second half of 2022”, a- he declared.

Regarding the average impact on banks of the one-time imposition of the “Cukai Makmur” (Prosperity Law) announced in the 2022 budget, the research firm said it was only a one-time hike. tax rate and that she expects investors to eventually shift their focus to improving bank fundamentals (recovery play) which will benefit from stronger economic growth.

“We continue to see prospects for improving total income supported by a pick-up in loan growth and potential interest rate hikes benefiting banks’ net interest margins.

“In addition, the quality of banks’ assets is expected to improve in the future, which will require lower provisions,” he added. – Bernama


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