Kenanga Research has made an “Overweight” call on the banking sector on the back of the demand for loans to be exponential and its growth may mitigate any NIM erosion from the ongoing competition of deposits.
The stockbroking firm said that it still believes that there is still value in investing in the sector as exposure to the broader economy could cushion investors against specific threats.
It said that most banks anticipate at least one OPR hike in 2HCY22 and this should translate to a slight bump to annualised NIMs thereafter.
The stockbroking firm that it anticipates NOII to stabilise from the industry-wide decline in CY21 as we operate in more normalised trading and investing landscape
The stockbroking firm said that the growth in fee-based income will help to build a more sustainable base for the banks.
It said that the dividend payments are also mostly back to pre-Covid levels, indicating that soundness in capital management has recovered. With regards to the digital banking license, BNM has determined the winner of the five licenses but will be reserving an official statement in due time, pending finalisation of legal documentations.
We withhold any specific stock recommendations for now, pending the release of our 2QCY22 banking strategy piece in the coming days. For the 1QCY22
