KUALA LUMPUR: The Malaysian banking sector remains bullish as it provides a good shelter from Trump 2.0, said Hong Leong Investment Bank Bhd (HLIB).
In a note today, it said that system loans growth grew by 5.7 per cent year-on-year (y-o-y) while deposits remained resilient at 3.1 per cent y-o-y.
“However, leading indicators were mixed. Separately, we see the first quarter 2025 net interest margin (NIM) holding up well, given easing seasonal fixed deposits rivalry.
“Most banks are looking to employ more disciplined loans expansion strategy and are not aggressively hunting for deposits. Moreover, it offers decent dividend yield of 5.0 per cent,” it said.
Overall, HLIB maintained its ‘overweight’ call on the sector, with ‘buy’ calls on Affin Bank, AMMB Holdings, Bank Islam, CIMB, Maybank, Public Bank, and RHB Bank.
Meanwhile, Kenanga Investment Bank Bhd said that most banks are expecting some challenges in maintaining their interest margins, but remain confident on loans growth, averaging between 5.0 and 6.0 per cent.
“This ties well with our projection for industry loan growth to come in at 6.0 per cent, on the back of ongoing developments in Johor’s Special Economic Zone and ongoing data centre projects, supported by a stable overnight policy rate of 3.0 per cent anticipated throughout 2025.
“Immediate headwinds consist of uncertainties in foreign trade policies and RON95 subsidy rationalisation possibly hampering consumer appetite for loans,” it said.
Kenanga Investment Bank also maintained its ‘overweight’ call on the banking sector.
“Our first quarter 2025 top picks are Ambank (target price (TP): RM6.80) for efforts in optimising its return on equity and higher payouts to drive dividend yields above its present 5.0 per cent, and Maybank (TP: RM12.00) for remaining the market share leader whilst still expanding at the expense of larger peers.
“Its dividend yields (6.0 per cent) continue to lead and are expected to be entirely in cash,” it added. – BERNAMA
