Company-Specific Insights
Affin Bank
Affin Bank delivered an impressive performance in 3Q24 with a 45% year-over-year increase in net profit, driven by substantial provision writebacks. Quarter-over-quarter, it saw a 23% increase, primarily due to improvements in impaired loans. Despite these gains, Affin Bank is recommended as a SELL with a target price of RM2.39 due to the expectation of less favorable risk-reward dynamics.
Alliance Bank
Alliance Bank’s performance in 3Q24 was in line with expectations, posting a modest 2.4% year-over-year increase in net profit. The bank experienced a 7.5% quarter-over-quarter growth. Despite a consistent performance, Alliance Bank is recommended as a HOLD with a target price of RM4.84, reflecting stable but not overly impressive earnings prospects.
AMMB Holdings
AMMB Holdings exceeded expectations with a 6.6% year-over-year growth in net profit for 3Q24, supported by stronger-than-expected net interest margins (NIM). However, quarter-over-quarter growth was nearly flat at 0.1%. The recommendation for AMMB is a HOLD with a target price of RM5.74, suggesting a cautious outlook amidst modest earnings improvements.
BIMB Holdings
BIMB Holdings underperformed in 3Q24, with a 7.2% decline in year-over-year net profit and a 4.9% drop quarter-over-quarter, primarily due to increased financing allowances and finance costs. The bank is recommended as a HOLD with a target price of RM2.38, indicating a need for caution given its current challenges.
CIMB Group
CIMB Group’s 3Q24 results were in line with expectations, showing a 10.5% year-over-year increase in net profit and a 3.5% quarter-over-quarter growth. The bank is holding steady, and the recommendation is a HOLD with a target price of RM8.12. The consistent performance suggests potential stability for investors.
Hong Leong Bank (HL Bank)
Hong Leong Bank delivered a solid performance with a 5.8% year-over-year increase and a 5.4% quarter-over-quarter growth in net profit for 3Q24. With a recommendation to BUY and a target price of RM23.60, HL Bank is favored for its stable earnings and potential for future growth.
Maybank
Maybank’s 3Q24 results met expectations with a 7.6% year-over-year increase in net profit and marginal quarter-over-quarter growth. It is recommended as a HOLD with a target price of RM10.56, reflecting a stable outlook with limited upside potential.
Public Bank
Public Bank outperformed with a 12.4% year-over-year increase in net profit for 3Q24, driven by provision writebacks. Quarter-over-quarter growth stood at 7.3%. The bank is recommended as a BUY with a target price of RM5.35, highlighting its robust performance and attractive valuation.
RHB Bank
RHB Bank saw a remarkable 28.2% year-over-year increase in net profit and a 13.6% quarter-over-quarter growth in 3Q24. Lower provisions and strong non-interest income were key drivers. RHB is recommended as a BUY with a target price of RM7.30, indicating its potential to outperform the sector in the coming months.
Sector Outlook and Recommendations
Looking ahead to 2025, the Malaysian banking sector is expected to experience a slight moderation in earnings growth to 7% due to a high base of non-interest income. However, stable NIM and a rebound in loan growth are anticipated to cushion the impact. The sector has outperformed the FBMKLCI year-to-date, largely due to strong foreign inflows and an appreciating ringgit.
The recommendation remains MARKET WEIGHT, with a focus on laggards like Public Bank, RHB Bank, and Hong Leong Bank. These banks offer attractive valuations and potential credit cost tailwinds. A modest recovery in NIM is projected for 2025, and stronger business loans growth is expected to drive system loans growth.
Asset quality remains stable, with minimal writebacks factored in due to potential impacts from targeted subsidies and higher consumption tax. Adequate provision buffers are expected to keep net credit costs stable and below pre-pandemic levels.
