Broker: CGS International
Date of Report: March 19, 2026
Excerpt from CGS International report.
- CGS International maintains an Overweight rating on Malaysian banks, seeing minimal direct impact from Middle East tensions, with only minor risks from potentially lower OPR (Overnight Policy Rate) and slightly higher credit costs.
- A 25bp OPR cut is estimated to reduce sector net profit by just 1.6%, with banks’ robust management overlay (RM4.33bn at end-2025) able to cushion up to a 37.8% increase in gross impaired loans.
- Top sector picks are AMMB (dividend payout growth and NIM improvement potential), Maybank (ROE expansion and NIM guidance), and RHB Bank (highest dividend yield and strong cost controls).
- Sector dividend yields are attractive (CY26F dividend yield of 5.5%, with RHB Bank at 6.5%) and earnings remain defensive despite oil price-related risks.
- Sector risks include a weaker-than-expected economy, deposit competition, or further OPR cuts, but CGS International sees the Malaysian banking system as well-positioned with proactive asset quality management and strong capital buffers.
- ESG risks for banks are assessed as low, with Maybank highlighted as an ESG leader due to strong disclosure, lending guidelines, and green financing initiatives.
Above is an excerpt from a report by CGS International. Clients of CGS International can be the first to access the full report from the CGS International website: https://www.cgs-cimb.com/
