AmInvestment Bank Bhd maintained an ‘overweight’ rating on the banking sector with a stable to moderately high net interest margin (NIM) projection for banks for the year.
In its research note yesterday, the investment bank revised the sector's core revenue growth for the year to 23.5% from 16.1% previously, after adjusting assumptions for higher NIM as well as refining its credit cost estimates.
“We expect sentiment towards banks to improve after the resumption of dividends with better visibility on earnings and a post-automatic moratorium on asset quality.
"The recent smooth vaccination program has increased the swap rate and turnover of Malaysian Government Securities (MGS)," he said as reported by Bernama.
In addition, AmInvestment also announced a ‘buy’ recommendation for Hong Leong Bank with an equivalent value (FV) of RM20.30 per share; RHB Bank (FV RM6.80 per share); Maybank (FV RM9.80 per share) and CIMB Group (FV RM5.50 per share).
“We chose the larger systematic banks, Maybank and CIMB to continue to recover this year as well as banks with‘ undemanding ’valuations such as RHB Bank traded at attractive price/book values.
"We also chose Hong Leong because of the strong profit contribution from its affiliates as well as the resilient asset quality," according to AmInvestment.
