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Market uncertainties fail to deter positive outlook for Malaysia's banking sector


Despite market uncertainties, research firms have maintained a positive stance on Malaysia's banking sector, citing robust lending indicators and potential for earnings and dividend growth. RHB Investment Bank noted that system loans grew 5.0% YoY in March, with system loan applications reaching MYR134bn (USD30.1bn). Meanwhile, MIDF Research predicted lacklustre earnings in Q1 2023 due to deposit-competition-related NIM pressure, but anticipated a recovery in non-interest income contributions and normalised operational expenditure. Hong Leong Investment Bank suggested the recent market slump presents an opportunity to buy banking stocks, noting that despite fear-driven selling, nothing has drastically changed or deteriorated. The firms suggested a defensive posture and a trading-oriented strategy to take advantage of inexpensive valuations, appealing dividend yields, and the undervalued ringgit.

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