RHB Research has maintained an “Overweight” recommendation for the banking sector with its top picks in the sector Malayan Banking, Hong Leong Bank, CIMB, and AMMB as its top picks.
It said that the Jan 2022 banking system data continued to build on the recovery trajectory seen since Aug 2021, with an MoM loan growth of 0.5% (YoY: 4.7%).
RHB said that the loan demand from the household and non-household segments moderated slightly, due to seasonal factors. Asset quality continued to improve, with system GIL ratio at 1.45% and LLC at 131%.
It said that for now, it said that it maintained its 2022 system loans growth forecast of 5.2% YoY, as it awaits further clarity on interest rate environments locally and globally.
RHB said that Jan 2022 system loans grew 0.5% MoM or 4.7% YoY driven by residential mortgages (+0.6%) and strong contributions from mining & quarrying (+9.1%), as well as electricity, gas & water supply (+5.9%).
It said that these offset the 4.7% contraction seen in the “other sectors” segment. On a YoY basis, the main contributors were also residential mortgages (+6.9%), along with utilities (+17.2%) and transport, storage & communications (+16.1%).