KUALA LUMPUR, Nov 12 — CGS-CIMB Securities Sdn Bhd (CGS-CIMB) is still projecting a core net profit (NP) growth of 2.4 per cent for banks in 2022, even after it had adjusted its earnings projection to factor in Cukai Makmur and a 25-basis point hike in overnight policy rate (OPR) in mid-2022.
“We cut our projected core NP growth from 10.5 per cent to nine per cent for 2021 and from 8.1 per cent to 2.4 per cent for 2022.
“We are encouraged that our expected earnings recovery in 2021-22 forecast (F) remains intact after factoring in Cukai Makmur, despite projecting core NP to expand at slower rates,” said the brokerage firm in a research note.
It had also raised its projected growth in core NP for banks from 7.6 per cent to 17.7 per cent for 2023, due to a lower base for 2022F core NP, which is expected to be affected by Cukai Makmur and the positive impact of the OPR hike on 2023 earnings.
The firm reiterated its ‘overweight’ rating on Malaysian banks, given the potential re-rating catalyst from the continuation in earnings recovery in 2022.
The projected seven per cent increase in net interest income and 4.8 per cent drop in loan loss provisioning are expected to be the earnings catalyst for 2022.
“Following the earnings adjustments, we kept our recommendations for all Malaysian banks under our coverage, including the ‘add’ ratings for Public Bank, Hong Leong Bank, Maybank, RHB Bank and AMMB, as well as ‘reduce’ calls for Affin Bank and Alliance Bank. — Bernama
