KUALA LUMPUR, Aug 1 (Bernama) -- Kenanga Investment Bank Bhd expects the overnight policy rate (OPR) to remain at 3.0 per cent for the rest of the year, with any potential changes likely to lean towards a downside.
In a note today, the investment bank reiterated its “overweight” stance on the sector, citing its resilience, which is bolstered by improved economic prospects driven by infrastructure projects and investments.
“System loans grew by 6.5 per cent in June 2024, with potential easing anticipated in the second half of 2024. This aligns with our forecast of 5.5-6.0 per cent for the second quarter of 2024.
“Business loans reported stronger sequential growth due to pent-up working capital needs post-festive seasonality, particularly in the service industries. Meanwhile, deposit growth remained modest as spending appetite appears healthy,” it noted.
Kenanga added that market tailwinds, such as ongoing loan growth and improved gross domestic product (GDP) along with better margin retention, are expected to outweigh industry headwinds, including inflationary pressures and a weaker ringgit.
“We anticipate fewer challenges to the sector's resilience, which remains attractive due to appealing dividend yields (6.0-7.0 per cent) and lower sector volatility compared to other industries.”
Maybank Investment Bank also expressed optimism about continued loan growth and improvements in current account and savings account (CASA) trends, which are beneficial for the banking sector.
“Household loan growth remained steady at 6.4 per cent year-on-year (y-o-y), while non-household loan growth accelerated to 6.4 per cent y-o-y, up from 4.8 per cent y-o-y in May 2024. This is the fastest growth for non-household loans since October 2022.
“Auto financing growth was robust at 9.9 per cent y-o-y, residential property lending grew steadily at 7.5 per cent y-o-y, and commercial property lending increased by 6.5 per cent y-o-y,” it said.
On the corporate side, it said the construction lending growth slowed to 4.9 per cent y-o-y in June 2024, down from 5.6 per cent y-o-y in May.
However, working capital loans surged by 6.8 per cent y-o-y, up from 4.0 per cent y-o-y in May, it added.
-- BERNAMA
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