New Straits Times

Analysts upbeat on local banking sector

Analysts upbeat on impact of sound economic policies and Overnight Policy Rate increase


ANALYSTS are upbeat on the local banking landscape in the first half of the year on the back of sound economic policies and Overnight Policy Rate (OPR) hike.

The commendabl­e 2017 results by almost all banking groups would provide a catalyst for another strong performanc­e this year, they added.

Analysts also believe the 14th General Election (GE14) will not put much dent in the banking sector, given the country’s strong fundamenta­ls.

Malaysia’s economic diversific­ation and reforms had contribute­d to continued growth despite external challenges, they said, adding that bold moves such as rationalis­ing subsidies for fuel and sugar reflected the country’s willingnes­s to move towards a market-oriented mechanism.

“Most analysts are forecastin­g gross domestic product (GDP) growth of between 5.3 and 5.5 per cent this year due to a strong business confidence, especially in the first half of the year,” said an analyst.

Citing statistics from global macroecono­mic data provider, CIEC Data, the analyst said the overall business confidence in Malaysia in the first quarter was at 12.3 per cent, compared with 6.9 per cent in the correspond­ing quarter of last year.

“Confidence in the local financial industry in the first quarter, meanwhile, is at 29.4 per cent, against 24.4 per cent in the same quarter last year. This is a good thing because the financial industry is one of the first indicator of a country’s economic performanc­e.”

When asked how would the upcoming GE14 impact the financial landscape, the analyst said: “Not much. The banks have already factored in the disruption in the event there are changes.”

Another analyst said the upbeat performanc­e of the country’s big banks, namely Malayan Banking Bhd, CIMB Group Holdings Bhd, Public Bank Bhd and RHB Group, which had posted commendabl­e earnings for the financial year ended December 31 last year, was an indication of the strong momentum going into this year.

“Everything is aligned right now, both domestical­ly and globally.

“We are seeing a consistent and the longest growth in the United States economy, China is booming as well, and locally, the recent hike in OPR will definitely be beneficial to banks over the short term,” said the analyst.

Last Friday, Maybank and CIMB Group, the country’s top two players, reported record earnings in their 2017 results.

Maybank’s net profit rose 11.5 per cent to RM7.52 billion last year and CIMB Group reported RM4.48 billion net profit, up more than 25 per cent from the preceding year.

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 ??  ?? Maybank’s net profit rose
11.5 per cent to RM7.52 billion last year.
Maybank’s net profit rose 11.5 per cent to RM7.52 billion last year.

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