KUALA LUMPUR, Feb 28 ― The country’s banking sector is expected to remain resilient despite the increased pressure on their net interest margin due to interest rate cuts, an investment bank said.
Kenanga Investment Bank in a research note today said Maybank posted its best quarter-on-quarter (QoQ) performance in the fourth quarter of the financial year 2019 (Q4FY19) as card not present transaction (CNP) saw a 22 per cent uptick to RM2.56 billion underpinned by softer impairment allowance.
“On a year-on-year (YoY) basis, CNP moderated as impairment allowance saw a hike of 44 per cent to RM2.32 billion with operation expenditure was three per cent higher at RM11.6 billion,” it said.
CNP refers to purchases made by cardholders without physically presenting their credit or debit card at the time of purchase, which often occurs online.
On Maybank’s FY2020 earnings, the investment bank said it has revised downwards its forecast by five per cent to RM7.9 billion mainly on the account of moderate loans, net interest margin (NIM) pressure as well as lower economy and volatility.
For AMMB Holding, Kenanga Investment Bank said the bank earnings forecast is in line with market expectations supported by strong fund and fee-based income.
“We retain our FY2020 earning forecast guided by the return of equity (ROE) earnings of RM1.5 billion as results came in in line with our call despite an increased pressure on NIM as another cut is expected,” it said.
Meanwhile, for RHB Bank, the investment bank said the bank recorded a stellar performance as CNP saw an uptick of eight per cent, driven by the top line revenue of RM7.1 billion and lower impairment allowances.
On RHB’s FY2020 earnings, Kenanga Investment Bank said it revised downwards its estimate by one per cent to RM2.5 billion as it would be tough for the bank to achieve the ROE of 10.5 per cent given the uncertainties coming from trade tension and Covid-19 as well as the possibility of a further rate cut.
The investment bank has maintained its “outperform” call on both Maybank and AMMB stocks and maintained its neutral stand fro RHB bank.
As at midday break, Maybank declined seven sen to RM8.45 with 5.63million shares changed hands, AMMB shed six sen to RM3.71 with 1.34 million shares traded and RHB slipped six sen to RM5.55 with 7.75 million transacted. ― Bernama
