PETALING JAYA: Malaysian banks are heading into a period of change, with Open Finance set to reshape competition and customer data sharing from next year, while the expansion of the FBM KLCI could trigger some short-term portfolio repositioning in the sector.
AmInvestment Bank Research said Open Finance, which will allow financial information to be shared more freely with customers’ consent, could weaken the long-standing advantage banks have gained from keeping customer data within their own ecosystems.
However, it said richer data flows could also open new growth opportunities, particularly in wealth management and micro, small and medium enterprise (MSME) lending.
“Open Finance has largely flown under investors’ radar, but we think attention needs to start shifting here as the market begins to look ahead and position for next year’s winners,” it said in a report.
AmInvestment Research said CIMB Group Holdings Bhd
, Hong Leong Bank Bhd and Alliance Bank Malaysia Bhd were among banks with different potential advantages under the new environment.
It viewed CIMB as having the strongest starting position, supported by its customer base, cross-selling capabilities and TNG Digital’s distribution reach.
“Hong Leong Bank, meanwhile, could leverage its digital track record to narrow the gap, while Alliance Bank could use richer customer insights to improve customer targeting and deepen wallet share.”
The research house estimated that Open Finance could unlock about RM400bil of wealth management assets under management, translating into an annual revenue pool of about RM2bil based on a blended fee rate of 50 basis points.
It estimated that capturing 8% to 20% of this opportunity could lift earnings by about 4% to 14% for the three banks, with the capital-light nature of wealth management potentially translating into dividend yield gains of 0.4 to 1.4 percentage points.
MSME lending could provide another avenue, although AmInvestment Research said the earnings impact would be smaller due to higher capital requirements and credit risks.
Separately, TA Research said the expansion of the FBM KLCI from 30 to 50 constituents would result in a structural dilution of the banking sector’s index representation, although the impact on fundamentals should be limited.
The 20 additional constituents will be introduced in two phases, with the first 50% of their eventual index weights taking effect on Dec 21, 2026, followed by full weights on June 21, 2027.
TA Research said the financial sector’s weighting would fall from 42.7% currently to 39.4% in the first phase and 36.6% after the second phase, based on market data as at June 30
Based on about RM3bil in passive assets tracking the FBM KLCI, the research house estimated gross passive selling of about RM202mil across six existing banking constituents, partly offset by about RM22mil of potential passive buying into Alliance Bank if it is included in the expanded index.
This would result in estimated net passive outflows of about RM180mil, equivalent to only 0.06% of the combined free-float market capitalisation of the seven affected banks.
“Even under a higher RM5bil passive-AUM assumption, estimated net selling would amount to approximately RM300mil, equivalent to only around 0.1% of the combined free-float market capitalisation of the affected banks,” it added.
