Higher Dividends And ROE To Drive Banking Sector -- CIMB Securities

KUALA LUMPUR, Dec 9 (Bernama) -- Higher dividend payouts and return on equity (ROE) improvements will be key catalysts to the banking sector going into 2026.

In a note today, CIMB Securities Sdn Bhd said that although the sector’s core net profit growth is expected to remain subdued, Malaysian banks have shifted from cyclical earnings growth to a phase of “capital-efficient growth” driven by risk-weighted assets (RWA) optimisation.

“This will enhance capital headroom and support more effective capital optimisation/reallocation,” it said.

Public Bank Bhd and Hong Leong Bank Bhd will fit this capital optimisation theme, CIMB Securities said.

It has upgraded the sector to overweight from neutral, following rating upgrades for Malayan Banking Bhd and AMMB Holdings Bhd, coupled with target price increases for Maybank, Public Bank, RHB Bank, AMMB, and Hong Leong Bank.

Nonetheless, it expects bank earnings to be flattish in the fourth quarter of 2025 as the worst of the net interest margin compression from the July 2025 overnight policy rate cut eases; non-interest income is expected to hold up on the back of wealth, treasury and foreign exchange activity. 

-- BERNAMA