KUALA LUMPUR, March 14 (Bernama) -- The FTSE Bursa Malaysia KLCI (FBM KLCI) ended the week slightly higher, in line with regional indices despite the weaker performance on Wall Street overnight. At 5 pm, the FBM KLCI rose 2.12 points or 0.14 per cent to 1,512.15 from Thursday’s close of 1,510.03. The market bellwether opened 10.08 points lower at 1,499.95, and moved between 1,493.29 and 1,516.25 throughout the day. On the broader market, gainers outpaced losers with 680 to 292, while 437 counters were unchanged, 1,009 untraded, and 13 suspended. Turnover was marginally lower at 3.24 billion units worth RM2.5 billion from 3.25 billion units worth RM2.90 billion on Thursday.
The outlook for the banking sector remains positive, with RHB Investment Bank projecting 6% net profit growthin 2025. The sector has shown resilience, driven by strong earnings and attractive dividend yields. RHB maintains an OVERWEIGHT stance, favoring banks with solid earnings delivery and growth potential.
Key Highlights:
Positive Earnings Growth: The sector posted a 10% growth in full-year earnings, despite a slight dip in the fourth quarter due to seasonal effects on net interest margins (NIM), non-interest income, and operating expenses.
Top Picks: RHB Research continues to favor AMMB Holdings as a top pick, with a recent shift in preference between CIMB Group and Alliance Bank Malaysia, following CIMB's share price dip, which is seen as a buying opportunity.
Quarterly Performance:
- Despite a 3% quarter-on-quarter dip in profits, mainly due to seasonal factors, six out of eight banks met expectations. Notably, Affin Bhd and Bank Islam Malaysia Bhd (BIMB) outperformed, with stronger-than-expected net loan impairment writebacks.
- Public Bank exceeded expectations with a 3% higher-than-forecast pre-tax profit, driven by overlay reversals.
Sector Trends:
- Mixed Results: While some banks struggled with softer results, Hong Leong Bank Bhd (HLBK) saw strong client franchise sales, and Maybank benefited from NIM expansion, supported by CASA and improved asset yields.
- Affin's Performance: Affin’s four-percentage-point NIM improvement from CASA growth led RHB to upgrade its recommendation from Sell to Neutral.
Dividends and Payouts:
- Dividend surprises: HLBK and BIMB surprised the market with better-than-expected payouts. On the other hand, Maybank's interim dividend fell short due to a lower payout ratio, while Affin opted for a one-for-18 bonus issue instead of a dividend.
Looking Ahead:
Geopolitical Uncertainty: While banks are cautious about geopolitical risks and the potential impact on margins, domestic resilience is expected to drive loan demand.
Deposit Growth Lag: Despite strong loan growth, deposit growth is still lagging, and RHB Research will be watching closely for any increased competition for deposits.
Concerns for Overseas Operations: Banks with overseas operations are concerned about potential rate cutsand tighter liquidity conditions, which could impact NIMs.
2025 Outlook:
RHB expects the banking sector to see 6% net profit growth in 2025, driven by 6% operating income growth and slight positive JAWs. However, higher credit costs from lower overlay reversals could partially offset these gains.
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