Kuala lumpur: Analysts have maintained their ‘Overweight’ calls on the banking sector, citing resilient earnings, loan growth and attractive dividend yields despite ongoing margin pressures.
According to BERNAMA News Agency, Kenanga Investment Bank Bhd noted that the sector continued to demonstrate earnings resilience following the recent results season. Although most banks reported a sequential dip in net interest margins (NIMs), this indicates that margin pressures may persist until the first half of calendar year 2026 (1HCY26), when long-term deposits mature. The report highlighted that Maybank, CIMB, RHB Bank, and AmBank benefited from write-backs from successful corporate restructurings, enabling them to reinforce their provisioning buffers.
Kenanga Investment Bank Bhd further emphasized that while banks with regional exposure have increasingly presented results on a constant-currency basis to mitigate the effects of a stronger ringgit, domestic operations have remained stable and continued to support overall performance. The bank maintains its ‘Overweight’ stance on the sector.
Meanwhile, Hong Leong Investment Bank Bhd (HLIB) reported that 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. HLIB noted that leading indicators have moderated with narrower interest spreads due to lower loan yields, expecting NIM compression to persist into the fourth quarter of 2025 before elevated deposit costs eventually stabilize.
HLIB also maintained its ‘Overweight’ stance on the sector, supported by undemanding valuations, dividend yields exceeding five per cent, and a favorable risk-reward profile. The investment bank reiterated ‘Buy’ ratings on Affin, Alliance Bank, AmBank, CIMB, Maybank, Public Bank, and RHB. It stated that the sector offers 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).