KUALA LUMPUR, April 1 ― Maybank Investment Bank Bhd (Maybank IB) has maintained its “positive” stance on Malaysian banks as the banking system remains stable and resilient amid economic recovery.

It said Bank Negara Malaysia’s (BNM) Financial Stability Review (FSR) report for the second half of 2021 (2H21), nevertheless, highlights that the recovery was uneven and a few sectors continued to warrant monitoring.

“The report also highlights the risk of higher mark-to-market (MTM) losses on investments should bond yields rise. This, however, is not unexpected and has somewhat been factored in our forecasts,” Maybank IB said in a research note today.

The research house said rising oversupply in the commercial real estate (CRE) sector remained a concern but BNM pointed out that financial stability risks were manageable

On the risk of higher MTM losses, Maybank IB said while the banking system remains sound, BNM cautioned that domestic bond yields were likely to experience further upward pressure amid monetary policy normalisation in the United States (US).

“This could lead to outflows from emerging market economies such as Malaysia, as well as an expected pick-up in deposit competition. We have factored this in our forecasts to some extent, in that we project aggregate non-interest income to contract marginally this year,” the research house said.

RHB Investment Bank Bhd (RHB IB), in another note, reiterated its “overweight” stance on the banking sector despite a softening momentum.

It noted that in February 2022 banking system data showed a slight slowdown in momentum, with system loans growing grew 0.2 per cent month-on-month (MoM) compared to 4.7 per cent with year-on year basis (YoY).

RHB IB shared that loan demand continued to ease from both the household and non-household segments, reflecting the seasonally softer momentum earlier in the year.

Asset quality remained robust, it said despite a spike in gross impaired loans (GIL) from the mining and quarrying sector that pushed the system GIL ratio to 1.53 per cent.

“We maintain our 2022 system loans growth forecast at 5.2 per cent YoY,” it added. ― Bernama