CGS-CIMB Research remains bullish on Malaysia's banking sector, reiterating its "overweight" call due to robust loan growth and attractive valuations. An estimated 10% write-back in management overlay could improve net profits for 2023-2024 by about 1.7%, the firm said. Attractive valuations are evident, with a forecasted dividend yield of 5.3% for 2023. The firm's top pick is RHB Bank Bhd due to its compelling valuation and dividend yield. It also applauded May 2023's recovery in loan growth, largely propelled by a stronger growth of 1.6% YoY for business loans. The firm remains positive on the industry's repricing gap, predicting an expansion in net interest margins in 2Q23 compared to 1Q23.
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