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.
CreditSight, a Fitch Group company, has provided an outlook on Malaysian banks following the strong performance for FY24/F9M25, maintaining Market Perform recommendations for CIMB Bank and RHB Bank, while initiating a Market Perform recommendation on AmBank.
Key Takeaways:
Stronger Earnings Across Banks: All three major Malaysian banks reported stronger earnings, supported by stable to higher Net Interest Margins (NIMs) due to easing liquidity conditions and targeted loan growth. CIMB led in profitability growth year-over-year (YoY).
Loan Growth Projections for 2025: Banks are targeting mid-single digit loan growth (5-7%) in 2025, with CIMB seeing a recovery after a soft FY24 (+2.6% YoY). AmBank is on track for 4.4% YoY growth, while RHB expects stable growth. Medium-sized commercial segments will be key targets, likely increasing competition in lending.
NIM Expectations: NIMs are expected to trend differently across banks:
- RHB and AmBank: Expected to remain flat or slightly improve, thanks to a focus on NIM defense and a stable domestic policy rate.
- CIMB: Forecasted to experience a 5 basis point (bp) compression due to exposure in overseas marketslike Singapore, Thailand, and Indonesia.
Liquidity and Credit Quality:
Liquidity Metrics: Liquidity coverage ratios (LCR) remain acceptable, ranging from 130-140%. Gross Loan-to-Deposit Ratios (LDRs) are up YoY, with banks reducing liquidity drag on margins. AmBank has a higher LDR due to longer-duration wholesale funding.
Credit Cost and Asset Quality:
- Credit costs are expected to normalize in 2025 at CIMB and AmBank, with RHB forecasting a 15-20bplevel.
- Gross impaired loan (GIL) ratios improved YoY at CIMB and RHB, while AmBank saw steady levels.
- Domestic asset quality remains favorable, but overseas exposure poses a risk, especially for RHB in Thailand and Cambodia.
Capital Position: Capital ratios are strong, with RHB leading at a CET1 ratio of 16.4%, followed by AmBank(14.9%) and CIMB (14.6%).
Outlook and Recommendations:
CIMB and RHB: CreditSight maintains a Market Perform recommendation, noting CIMB’s strong fundamentals, operating momentum, and geographical diversification across key ASEAN markets. However, RHB faces margin pressure and lagging returns compared to CIMB, but capital remains solid, and the margin gap is expected to narrow.
AmBank: The outlook remains positive with strong earnings and a solid capital base, but competition in the medium-sized commercial sector may intensify.
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