Kuala lumpur: Maybank Investment Bank Bhd (Maybank IB) projects 2026 to be a notably favorable year for the banking sector, with expectations of aggregate operating profit and net profit growth at 4.7 percent and 5 percent, respectively. The bank anticipates that domestic economic growth, pegged at 4.5 percent for the year, will underpin industry loan growth of approximately 5 percent.

According to BERNAMA News Agency, Maybank IB’s outlook suggests stability in net interest margins (NIMs), aided by the absence of further rate cuts and easing liquidity pressures. The bank highlighted the sector’s impeccable asset quality as a key factor supporting benign credit costs, while management overlays are expected to provide an additional safeguard.

Dividend yields remain promising, with projections averaging 5.5 percent for the financial year 2025 (FY2025) and 5.8 percent for FY2026. Most banks are expected to deliver dividend yields above 5 percent, with the exception of Alliance Bank Malaysia Bhd (ABMB) and Hong Leong Bank Bhd, which are anticipated to hover around 4-plus percent.

Maybank IB identified CIMB Bank Bhd, AmBank Group, and ABMB as its top three “buy” picks. CIMB is expected to benefit from an improved operating environment, experiencing reduced NIM pressure in Singapore and a stable economic outlook in Malaysia and Indonesia.

For AMMB Holdings Bhd, proactive funding cost management and business banking operations are forecasted to sustain growth momentum, with potential dividend payouts reaching up to 60 percent, surpassing Maybank IB’s 50 percent forecast.

Given the favorable macroeconomic momentum, stable interest margins, and benign credit costs amidst resilient asset quality, Maybank IB has upgraded its rating on the banking sector to ‘positive’ from ‘neutral’.