KUALA LUMPUR: Economists have maintained an “overweight” call on the banking sector with loan growth expected to be between 4.8 and 5.5 per cent.
Maybank Investment Bank Bhd (Maybank IB) said it maintained its 2023 industry loan growth forecast of 4.8 per cent, given that the industry loan growth has picked up pace marginally to 5.2 per cent year-on-year (y-o-y) in February 2023 from 5.0 per cent y-o-y in January 2023.
“But what is more positive is that loan applications jumped 29 per cent month-on-month (m-o-m) in February 2023, having contracted m-o-m over the past six months,” the research house said in a note today.
Maybank IB also said that current account and savings account (CASA) contracted y-o-y again for the second consecutive month, denoting the net interest margin (NIM) compression that the industry is expected to face this year, which has nevertheless been imputed into its forecast.
As for RHB Research, it reiterated its optimism about the banking sector despite the current uncertain market environment. The research firm believes that the banks have sufficient levers in place to support earnings and dividend growth.
“Overall, with Bank Negara Malaysia expecting economic activity to remain firm throughout the year, we reiterate our 2023 system loans growth forecast of circa 5.0 per cent y-o-y.
“Therefore, we keep an ‘overweight’ recommendation, with Malayan Banking Bhd, CIMB Group Holdings Bhd and AMMB Holdings Bhd as our top picks,” it said.
Meanwhile, Hong Leong Investment Bank Bhd (HLIB) said it maintained an “overweight” call on the sector as the system loans growth came in within its full-year financial year 2023 estimates of 5.0-5.5 per cent.
“This is as the banking sector’s February 2023 loan growth gaining some traction, thanks to stronger household and business segments.
“We see the opportunity to buy banks on weakness in the wake of the recent market slump, given irrational fear-driven selling, fundamentally speaking, nothing has drastically changed or deteriorated,” it said. – BERNAMA
