‘OVERWEIGHT’ CALL ON BANKING SECTOR
CIMB Securities selects Maybank, AMMB Holdings and Alliance Bank as top picks
LOAN growth expanded by 5.8 per cent in February 2024 compared with the same period last year, showing resilience despite softer loan indicators, said CIMB Securities Sdn Bhd.
This marks a slight increase from January’s 5.7 per cent yearon-year growth.
CIMB Securities said it was higher than the domestic loan growth forecast of 5.3 per cent for this year.
“The growth is quite good, considering that February was a short working month, compounded by the festive holiday season this year. Annualised loan growth was higher at 4.2 per cent in February this year, compared with the 3.0 per cent rate in the previous month, signalling stronger sequential growth.”
“Stripping off the Chinese New Year (CNY) base effect, loan applications grew 11 per cent yearon-year in February this year.
“Similarly, loans approved contracted a decrease of 18 per cent year-on-year in February, vs 40 per cent year-on-year in January,” CIMB Securities said.
However, it said without the CNY effect, February’s loans would have expanded seven per cent year-on-year.
“All in, loan demand indicators remained healthy, taking into consideration the base effect from the festive season.”
Gross impaired loans moved up by 0.8 per cent or RM287 million month-on-month in February 2024 (January 2024: -0.5 per cent month-on-month or -RM187 million month-on-month), after five consecutive months of improvement.
However, this is likely due to temporary effects from festive season. Gross impaired loans ratio remained low and unchanged at 1.6 per cent in February.
Loan loss cover was above 90 per cent, with February’s level at 92.4 per cent.
CIMB Securities kept an “overweight” rating on the sector.
Malayan Banking Bhd (Maybank) is one of its top picks for its potential as a strong source of non-interest investment income among big caps. AMMB Holdings Bhd was another pick for its potential in generating good trading income and benefiting from lower fixed deposit costs and Alliance Bank Malaysia Bhd was singled out for its healthy loan growth.