PETALING JAYA: The prospects for non-bank financial institutions (NBFIs) will hinge on earnings resilience, valuation support and selective dividend recovery amid uneven operating conditions.
While near-term headwinds persist, pockets of improvement are emerging across insurers, market infrastructure and non-bank lenders, shaping a cautiously balanced outlook.
Against this backdrop, RHB Research remained “neutral” on the NBFI sector, noting the sector performance has lagged broader equities.
“As of end-November 2025, all NBFIs under our coverage have underperformed the benchmark index,” it pointed out.
It highlighted that the largest share price decline came from RCE Capital Bhd
due to persistent operational challenges in the civil servant financing space.
Insurance counters had provided a modest counterweight to weakness elsewhere.
RHB Research noted its NBFI sector stock-picking methodology favoured earnings growth and valuations, hence its “buy” calls are on Aeon Credit Service (M) Bhd, with a target price (TP) of RM6.70 a share, and Allianz Malaysia Bhd, with TP at RM21.40 per share.
According to RHB Research, the two insurance companies under its coverage –Allianz Malaysia and Syarikat Takaful Malaysia Keluarga Bhd (STMB) – saw a slight rerating post third-quarter 2025 (3Q25) results release, as both adopted a more optimistic tone on dividends ahead.
Dividend expectations have improved alongside regulatory clarity.
“In the 3Q25 results briefings, both insurers came forward with a more optimistic tone on dividends,” it said, pointing to a “neutral” impact on capital ratios from forthcoming capital regulations.
“As such, we expect yields of at least 5% for both insurers.” Allianz Malaysia is favoured for stronger earnings momentum and higher yield potential.
On fundamentals, insurers delivered stable results through the first nine months of 2025 (9M25).
“Insurers under our coverage posted fairly decent 9M25 results, supported by robust insurance revenue recognition and stable-to-improving underwriting margins,” the research house said, adding that these were tempered by investment mark-to-market losses and, in the case of STMB (TP: RM3.30), a higher-than-expected tax rate.
While investment income visibility remained clouded, RHB Research was encouraged by the progress made to navigate through the central bank’s repricing cap on medical health insurance and Takaful products.
Turning to market infrastructure, Bursa Malaysia Bhd has benefitted from a rebound in trading activity.
RHB Research said: “We have observed a rebound in securities average daily value traded at RM3.2bil which is 21% higher than the 9M25 average of RM2.7bil.”
However, valuation discipline remains key, with RHB Research cautioning that the positives could have already been priced in.
For non-bank lenders, early signs point to gradual recovery.
“Asset quality has weighed on the non-bank lenders’ earnings performance year-to-date,” it said, citing elevated credit costs at AEON Credit Service and slower growth at RCE Capital.
Trends from the recent round of results suggested non-bank lenders could see a potential turnaround ahead, it said.
Collection improvements and accelerating disbursements underpin this view, with AEON Credit Service remaining the preferred pick given its diversification, digital banking progress and attractive returns outlook.
