PETALING JAYA: Analysts find most banks to be resilient and backed by their relatively low trade-related exposure.
In a report, Kenanga Research said local lenders were focused on respective domestic segments with a stronger focus on housing loans and small medium enterprises.
“Sector valuations declined likely due to foreign investors preferring a lower exposure to emerging markets, notwithstanding prolonged uncertainties that stemmed from trade tensions between United States and China,” the research house told clients in a note yesterday.
Kenanga Research said: “We take comfort that business gross impaired loan has not drastically increased, with upticks mostly seen in household loans which could have been seasonally affected by ongoing festivities.”
The research house reiterated its sector picks which offerred a mix of defensible growth prospects such as AMMB Holdings Bhd
(AmBank) which it reckoned had more solid return on equity or ROE.
It noted AmBank focused on stronger earnings drivers as opposed to gaining market share in less profitable segments.
Following its recent transition into foundation internal ratings-based or FIRB, the group’s newly acquired common equity tier or CET-1 levels of around 15% have led to more generous dividend pay-outs which made AmBank one of the leaders in yield prospects (around 6%).
“Among the large-cap banks, we like Malayan Banking Bhd as despite its leading market share, it still holds better-than-industry asset quality,” it said.
