RHB has an “Overweight” call on the Banking sector with its preferred picks being Hong Leong Bank (HL Bank), AMMB Holdings and Malayan Banking.
RHB said that based on our estimates, it said that the latest rate hike together with the first 25bps increase in May would raise sector FY22F net profit by 1.8%.
It said that a third-rate hike of 25bps in September would improve the cumulative earnings uplift to 2.2%. We will incorporate the July and third OPR hike into our forecasts when we review the coming 2Q22 results.
RHB believes that there are risks the upward revision in net interest income could be somewhat offset by potentially lower fee income, given the volatility in financial markets. “Currently, we are projecting a 5% YoY growth in sector earnings for FY22F,” the stockbroking firm said
Yesterday afternoon, Bank Negara Malaysia (BNM) raised the overnight policy rate (OPR) by 25bps – in line with economists’ expectations.
The path to monetary policy normalisation would be moderately positive for banks’ NIMs, providing cushion for any downside risks from rising macroeconomic challenges. Sector earnings growth at 5%, although unexciting, is decent as are dividend yields. We continue to prefer defensive names to weather market volatility
BNM raises the rate for the second time in 2022. BNM’s Monetary Policy Committee (MPC) at its meeting on 6 Jul decided to increase the OPR by 25bps to 2.25%. On 11 May 2022, the MPC raised the policy rate by 25bps from the record low of 1.75% – the first increase since Jan 2018. RHB economists believe the balance of risks is skewed towards the third hike of 25bps to 2.50% at the Sep 2022 MPC.
