Analaysts Maintain Overweight Call On Banking Sector Amid Earnings Resilience

KUALA LUMPUR, Dec 1 (Bernama) -- Analysts have maintained their ‘Overweight’ calls on the banking sector, citing resilient earnings, loan growth and attractive dividend yields despite ongoing margin pressures.

Kenanga Investment Bank Bhd said the sector continued to demonstrate earnings resilience following the recent results season, although most banks reported a sequential dip in net interest margins (NIMs), indicating that margin pressures may persist until the first half of calendar year 2026 (1HCY26), when long-term deposits mature.

It said Maybank, CIMB, RHB Bank and AmBank benefited from write-backs arising from successful corporate restructurings, enabling them to reinforce their provisioning buffers.

“While banks with regional exposure have increasingly presented results on a constant-currency basis to normalise the effects of a stronger ringgit, domestic operations have remained stable and continued to support overall performance.

“We maintain our ‘Overweight’ stance on the sector,” it said.

Meanwhile, Hong Leong Investment Bank Bhd (HLIB) said system loan growth remained resilient in October 2025 at 5.4 per cent year-on-year, underscoring stable lending activity despite a softer deposit backdrop due to weaker current account and savings account (CASA) and foreign currency inflows.

“Leading indicators have moderated. Interest spreads narrowed further owing to lower loan yields, and we expect NIM compression to persist into the fourth quarter of 2025 before elevated deposit costs eventually stabilise,” it said.

HLIB maintained its ‘Overweight’ stance on the sector, supported by undemanding valuations, dividend yields exceeding five per cent and a favourable risk-reward profile.

It reiterated ‘Buy’ ratings on Affin, Alliance Bank, AmBank, CIMB, Maybank, Public Bank and RHB.

“The sector continues to offer compelling value, currently trading at about minus two standard deviations from its pre-Covid-19 five-year mean price-to-book ratio despite delivering comparable return on equity (ROE),” it said.

-- BERNAMA