Upside potential for banking stocks

Year-to-date, Malayan Banking Bhd (Maybank) – the largest company on the stock exchange in terms of market capitalisation – is up around 4%. Similarly, Public Bank Bhd’s share price is up 2.64% year-to-date, while RHB Bank Bhd’s share price is up 3.2%.

DESPITE Covid-19-related challenges, Malaysian banks have seen a rise in profitability year-to-date, mainly due to lower provisions and better net interest margins from last year.

Last year, banks were hit by increased provisions from the impact of the loan moratorium as well as low interest rates. As such, the stock prices of most banks were beaten down.