PETALING JAYA: Foreign investors are being selective in their choice of Malaysian banking stocks as they weigh risks over dividends, with mid-sized banks in their focus while bigger banks have seen their foreign shareholdings being pared down.
CIMB Research, which has maintained a “neutral” rating on the country’s banks, said positive factors for sector include lower credit costs, higher net interest margins, and non-interest income bond gains.
“Key risks include higher-than-expected cost of funds, liquidity outflows, and worse-than-expected asset quality,” the research house added.
It noted that foreign shareholdings of RHB Bank
Bhd and AMMB Holdings Bhd, both mid-cap banking stocks, hit new highs.
AMMB’s latest quarterly data showed that foreign shareholdings, excluding that of foreign strategic shareholders, reached a new peak of 33.5% in March compared with 31.2% last December.
“RHB’s foreign shareholding also reached a new peak of 20.5% in May compared with 20.1% in April, its highest level in more than 15 years,” CIMB Research said.
The research house said that Hong Leong Bank Bhd’s foreign shareholdings of 11.8% in March slipped marginally compared with last December while Alliance Bank Malaysia Bhd’s foreign shareholdings of 21.8% as of May had also declined from April and was off the 23.9% peak achieved in August last year.
It said foreign shareholders pared their stakes in large banks such as CIMB Group Holdings Bhd, Malayan Banking Bhd (Maybank) and Public Bank Bhd recently.
It said Maybank’s foreign shareholdings of 19.48% in May was higher than April but still below the recent peak of 20.68% recorded last September.
CIMB Group’s foreign shareholdings of 33.9% in May was higher than a year ago and compared with April but still lower than the recent peak of 35.6% recorded in February. Public Bank’s foreign shareholding of 25.6% in May was lower than April and below the recent peak of 26.9% last December.
CIMB Research has a “buy” rating on RHB mainly for its dividends, as well as Alliance Bank Malaysia for its merger and acquisition possibilities and Hong Leong Bank for the resilience of its 17.8% associate Bank of Chengdu Co Ltd and Public Bank.
