KUALA LUMPUR, Nov 5 (Bernama) -- Bursa Malaysia closed higher, buoyed by Bank Negara Malaysia’s (BNM) decision to maintain the Overnight Policy Rate (OPR) at 2.75 per cent, alongside positive cues from Wall Street. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 19.30 points, or 1.19 per cent, to 1,635.86 from Wednesday’s close of 1,616.56. The benchmark index opened 6.72 points higher at 1,623.28, and fluctuated between an intraday high of 1,642.44 and a low of 1,622.62 during the trading session. However, market breadth was negative, with losers outnumbering gainers 723 to 497, while 466 counters were unchanged, 1,075 untraded and 10 suspended. Turnover rose to 3.74 billion units valued at RM3.61 billion compared with yesterday’s 2.81 billion units valued at RM2.57 billion.
Lower valuations matched by lower ROE projections The mood conveyed by management teams at recent bank analyst briefings has generally been a somber one, the consensus being that 2016 will continue to be a challenging year. We project 5% 2016 core earnings growth and while valuations have come off across the board, these are matched by lower ROE projections. We remain NEUTRAL on the sector – BUY AFG, HL Bank and HLFG; SELL AMMB. No growth in 2015 Though 2015 was challenging in many ways, banks’ operational performance was decent, with a 7% YoY growth in operating profit on an aggregate basis. NIMs held up better than expected towards year end while NOII growth was robust, aided in large part by forex income/gains. Profitability was nevertheless crimped at the net level due to the jump in credit costs and other allowances, resulting in aggregate core net profit coming in flat YoY. All banks saw core earnings drop YoY except for CIMB (from a low base) and Public Bank. ...