Analysts positive on banking sector following BNM's confidence in domestic financial system

KUALA LUMPUR: Research houses have maintained their positive stance on the banking sector following Bank Negara Malaysia's (BNM) optimism about the overall standing of the Malaysian economy and financial system.

In a note, Kenanga Research said it concurred with BNM’s confidence in the domestic financial system, assured by the sector’s strength, resilience and overall stellar management.

"As such, we maintain 'Overweight' on the banking sector and continue to believe that its fundamentals are well grounded.

"We also believe that the banking sector is not likely to experience any pressures which gravitate anything close to what is happening abroad," it said.

For the second quarter of 2023, Kenanga Research has opted to promote Public Bank Bhd as it is the leading bank in terms of gross impaired loan (GIL) reading, and RHB Bank Bhd for its strong capital safety.

Meanwhile, Hong Leong Investment Bank (HLIB) Research is bullish on banks again but believes the market would remain choppy since investors have not shaken off their jittery mood.

"We see an opportunity to buy banks on weakness in wake of the recent market slump, given irrational fear-driven selling, but fundamentally speaking, nothing has drastically changed or deteriorated.

"As such, we advocate employing a more trading-oriented strategy and we expect appetite for banks to come back, spurred by inexpensive valuations, appealing dividend yield, and undervalued ringgit, which could lure foreign investors back to the Malaysian market," it said.

HLIB Research has maintained its 'Overweight' recommendation on the sector, making 'Buy' calls on Public Bank, RHB, AMMB Holdings Bhd, Alliance Bank Malaysia Bhd, and Bank Islam Malaysia Bhd.

RHB Research has also reiterated an 'Overweight' call on the banking sector as it believes that banks have sufficient levers in place to support earnings and dividend growth to help tide investors through the volatile period.

Its preferred picks are Malayan Banking Bhd (Maybank), CIMB Group Holdings Bhd and AMMB Holdings. - Bernama

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Bank Negara , GIL , Banking , financial system ,


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