KUALA LUMPUR (Feb 2): Several banking stocks surged near historic highs on Friday, spurred by a favourable forecast for the 2024 banking sector and recent decisions of Bank Negara Malaysia (BNM) and the US Federal Reserve (Fed) to maintain their key rates.
At market close, Malayan Banking Bhd (Maybank) was up eight sen or 0.86% at RM9.34 — its highest level since May 2019. At the current price, Maybank's market capitalisation stood at RM112.64 billion.
Public Bank Bhd also saw an increase as it was trading up four sen or 0.91% to close at RM4.43, giving the bank a market capitalisation of RM85.99 billion. This is its highest level since October 2022.
RHB Bank Bhd was also up by two sen, or 0.36%, at a three-month high of RM5.62, with a market capitalisation of RM24.09 billion.
While both counters closed unchanged for the day, CIMB Group Holdings Bhd and AMMB Holdings Bhd were trading at near one-year high levels, with CIMB at RM6.23 and AMMB at RM4.24.
As a result, the Bursa Malaysia Financial Services Index was up 61.94 points, or 0.37%, breaking the 17,000 mark for the first time in almost five years at 17,004.93 points.
Earlier on Friday, analysts expressed a positive outlook for the banking sector in 2024 as Malaysia’s banking system grew 5.3% in terms of loan growth as at December 2023, which beat market expectations.
Analysts believe that business loan growth should provide some cushioning to the slowing momentum from households this year, given the government’s gradual roll-out of big-ticket public infrastructure projects.
MIDF Research maintained its “positive” rating for the banking sector, despite forecasting a slower 4.5% to 5% loan growth for 2024, with its top picks being CIMB and Alliance Bank Malaysia Bhd.
CGS-CIMB also projected a slower loan growth of 4% to 5% in 2024, noting a potential slowdown in automotive loan growth from 9.7% in 2023 to low single-digit rates this year, on the back of expected weaker car sales.
Despite that, CGS-CIMB reaffirmed its “overweight” rating for the banking sector, underpinned by a strong dividend yield of 5.1% estimated for 2024, with top picks being Hong Leong Bank Bhd, Public Bank and RHB.
On Jan 24, BNM decided to maintain the overnight policy rate at 3% after its first Monetary Policy Committee meeting of the year — the fourth consecutive time it has decided to keep the rate level since July 2023. Economists have projected the key rate to be kept intact for the rest of the year.
Following that, the Fed on Wednesday also opted to keep rates steady at a 23-year high of 5.25%-5.50% after its first two-day meeting of 2024.
However, policymakers at the US central bank have previously signalled they expect to cut rates at least three times this year, although the Fed chair Jerome Powell pushed back strongly against the idea that it could start reducing rates as early as March.