KUALA LUMPUR, March 12 — Research firms have maintained a neutral call on the banking sector for 2015 with some predicting slower loans growth.
Contrary to Bank Negara Malaysia’s (BNM) optimistic outlook,Affin Hwang Capital Research projected weakening Net Interest Margin (NIM) and unexciting capital market activities for this year.
BNM released its 2014 Annual Report and Financial Stability and Payment Systems Report yesterday.
“We stay cautious on the asset quality front of corporate accounts of commodity-related sectors,” it said in a note today.
Kenanga Research said from the profit and loss standpoint, banks were likely to see their bottom-line growth taper given the narrowing NIM, weak capital market activities along with rising credit cost.
“Even though on a balance sheet perspective, nearly all indicators shared by BNM suggested that our banking system continues to be robust and in good shape, we still maintain our neutral call for the sector as it still lacks re-rating catalysts,” it said.
Meanwhile, AllianceDBS Research said NIM was expected to remain under pressure due to deposit competition as banks prepared to meet the Liquidity Coverage Ratio (LCR) requirement under Basel III.
“BNM indicated that most banks have LCR of more than 60 per cent. Loan growth is expected between 8 and 9 per cent while capital markets continue to remain sluggish. Provisions should normalise,” it added.
It also said cost was the only item that banks should be able to manage prudently to manoeuvre net profit but the Goods and Services Tax implementation might add some pressure. — Bernama
