KUALA LUMPUR: CIMB Equities Research reaffirms its overweight call on the banking sector in view of the potential re-rating catalysts and AMMB remains its top pick for the sector.
It said on Monday, July 12 that last week's 25bp hike in the overnight policy rate (OPR) came earlier than its September 2010 expectation of its economic research team.
However, CIMB Research said this does not alter our positive stance on Malaysian banks as we expect it to have a neutral impact on banks given the parallel upward re-pricing of BLR and fixed deposit (FD) rates.
The research house envisages a positive environment for banks and project net earnings growth of 23.3% for 2010, driven by faster loan growth, healthy expansion of non-interest income and lower credit costs.
'We retain our OVERWEIGHT call on the sector in view of the potential re-rating catalysts of (1) strong earnings growth, (2) increase in investment banking income, (3) strong growth potential for the overseas operations, and (4) potential GP write-back. AMMB remains our top pick for the sector,' it said.
It said on Monday, July 12 that last week's 25bp hike in the overnight policy rate (OPR) came earlier than its September 2010 expectation of its economic research team.
However, CIMB Research said this does not alter our positive stance on Malaysian banks as we expect it to have a neutral impact on banks given the parallel upward re-pricing of BLR and fixed deposit (FD) rates.
The research house envisages a positive environment for banks and project net earnings growth of 23.3% for 2010, driven by faster loan growth, healthy expansion of non-interest income and lower credit costs.
'We retain our OVERWEIGHT call on the sector in view of the potential re-rating catalysts of (1) strong earnings growth, (2) increase in investment banking income, (3) strong growth potential for the overseas operations, and (4) potential GP write-back. AMMB remains our top pick for the sector,' it said.
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