KUALA LUMPUR: Maybank Investment Bank (Maybank IB) Research expects 11.6% earnings growth in the combined net profits for the banks under its monitor, underpinned by firm system loans growth amid the easing of credit growth in the household sector.
It said on Thursday, March 24 that its picks in the banking sector are CIMB and RHB Cap.
Maybank IB Research, which maintained its Overweight on the banking sector, said the sector remains in the pink of health with profits up a strong 34% last year, supported by strong asset ratios.
'Yesterday's analyst briefing, in conjunction with BNM's release of its 2010 Annual Report and Financial Stability and Payment Systems Report, sent a positive vibe on the domestic banking sector outlook, with key agenda in 2011 being to manage household sector resilience,' it said.
The research said there was no change to in its earnings forecasts and calls for the banks.
'System pretax profit surged 34% on-year to RM22.8 billion (2009: -11.4% on-year) driven by growth in both net interest income (+15.1% on-year) and fee income (+11.3% on-year), and the low base effect of 2009's other operating income which included an impairment provision by Maybank for its overseas investments.
'System returns on equity (ROE) strengthened to 16.5% (2009: 14%) and returns on assets to 1.5% (2009: 1.2%). Asset quality continued to improve with loan loss provisions contracting 11.6% On-year. System cost-to-income ratio was down 1.9 percentage points to 46.7%,' it said.
Household debt-to-GDP ratio was little changed at 75.9% as at end-2010 (end-2009: 76%). Although high against regional economies, BNM's assessment is of limited financial stress in the household sector as the debt level is supported by a high level of deposits and other forms of savings.
Maybank IB Research said household financial assets-to-debt ratio remained comfortable at 2.38 times (end-2009: 2.37 times) while liquid financial assets-to-debt ratio was 1.54 times (end-2009: 1.51 times).
Managing household resilience will nonetheless be a key agenda in 2011. Having announced new measures for credit cards last weekend, BNM will follow up with new guidelines on prudent lending to the retail sector.
The guidelines will set the minimum standards for new loans which include affordability and suitability assessments, incorporating stress testing on higher interest rates. The banks have been consulted on the new guidelines.
'Our expectations are for system loans to expand 11.5% in 2011, supported by stronger lending to businesses but the easing of credit growth at the household sector. Our forecasts are for an 11.6% growth in the combined net profits for the banks under our monitor. Our picks are CIMB and RHB Cap,' it said.
It said on Thursday, March 24 that its picks in the banking sector are CIMB and RHB Cap.
Maybank IB Research, which maintained its Overweight on the banking sector, said the sector remains in the pink of health with profits up a strong 34% last year, supported by strong asset ratios.
'Yesterday's analyst briefing, in conjunction with BNM's release of its 2010 Annual Report and Financial Stability and Payment Systems Report, sent a positive vibe on the domestic banking sector outlook, with key agenda in 2011 being to manage household sector resilience,' it said.
The research said there was no change to in its earnings forecasts and calls for the banks.
'System pretax profit surged 34% on-year to RM22.8 billion (2009: -11.4% on-year) driven by growth in both net interest income (+15.1% on-year) and fee income (+11.3% on-year), and the low base effect of 2009's other operating income which included an impairment provision by Maybank for its overseas investments.
'System returns on equity (ROE) strengthened to 16.5% (2009: 14%) and returns on assets to 1.5% (2009: 1.2%). Asset quality continued to improve with loan loss provisions contracting 11.6% On-year. System cost-to-income ratio was down 1.9 percentage points to 46.7%,' it said.
Household debt-to-GDP ratio was little changed at 75.9% as at end-2010 (end-2009: 76%). Although high against regional economies, BNM's assessment is of limited financial stress in the household sector as the debt level is supported by a high level of deposits and other forms of savings.
Maybank IB Research said household financial assets-to-debt ratio remained comfortable at 2.38 times (end-2009: 2.37 times) while liquid financial assets-to-debt ratio was 1.54 times (end-2009: 1.51 times).
Managing household resilience will nonetheless be a key agenda in 2011. Having announced new measures for credit cards last weekend, BNM will follow up with new guidelines on prudent lending to the retail sector.
The guidelines will set the minimum standards for new loans which include affordability and suitability assessments, incorporating stress testing on higher interest rates. The banks have been consulted on the new guidelines.
'Our expectations are for system loans to expand 11.5% in 2011, supported by stronger lending to businesses but the easing of credit growth at the household sector. Our forecasts are for an 11.6% growth in the combined net profits for the banks under our monitor. Our picks are CIMB and RHB Cap,' it said.
No comments:
Post a Comment