Kuala lumpur: Banks' net interest margin (NIM) is anticipated to recover in the second half of 2026 (2H 2026), assuming the Overnight Policy Rate (OPR) remains stable at 2.75 per cent throughout the year, according to Kenanga Investment Bank Bhd (Kenanga IB). According to BERNAMA News Agency, the investment bank noted that with the OPR remaining stable throughout 2026, deposits would be fully repriced. "The sector earnings could find support from a recovery in NIMs from the second quarter of 2026, when fixed deposits have fully repriced (post-July 2025 OPR cut). However, on an annualised basis, we could still see a low-single-digit compression across the industry. We anticipate OPR to remain stable at 2.75 per cent throughout 2026, which would keep this outlook intact," Kenanga IB stated. Kenanga IB further opined that banks are likely to adopt a more selective market-share strategy, which could impact near-term accretion to return on equity (ROE). "The banks have yet to provide their 2026 guidance, preferr ing to close their respective 2025 books first. A more meaningful reacceleration in loan growth will hinge on whether the impact from United States tariffs proves less disruptive, mainly to the manufacturing and tech-related sectors, supported by sustained investment inflows," it added. Meanwhile, RHB Investment Bank Bhd (RHB IB) remained optimistic about stronger loan growth ahead, citing a buildup in the approval loan pipeline and delays in disbursements. The bank observed a year-on-year (y-o-y) growth in loan applications and approvals, rising 11.7 per cent y-o-y and 9.2 per cent y-o-y, respectively. "System loan growth remains on track to meet our estimates, while a robust nonhousehold loan pipeline should support overall loan growth ahead. Liquidity, capital, and asset quality indicators stayed healthy, further reinforcing the domestic banking system's resilience," stated RHB IB. Additionally, both Kenanga IB and RHB IB maintained an 'overweight' rating on the banking sectors, with top picks including CIMB Bank, Hong Leong Bank, Maybank, and AmBank.