Stock Name: MAYBANK
Company Name: MALAYAN BANKING BHD
Research House: HWANGDBS
Company Name: MALAYAN BANKING BHD
Research House: HWANGDBS
Banking sector earnings is expected to grow at 15 per cent while return on equity (ROE) is anticpated at 16 per cent this year, says HwangDBS Vickers Research.
"We believe loans growth will continue to support net interest income growth amid competitive net interest margin while non-interest income should gear up on capital market activities," it said in a note today.
The research firm said banks were increasingly relying on non-interest income to enhance capital costs and improve ROE while expenses were expected to remain stable and provisions low.
It said projects under the Economic Transformation Programme would drive more fund raising activities this year while mergers and acquisitions transactions could surface with further divesment of government link companies.
Taking cue from the positive momentum last year, HwangDBS expects capital market activities to spur higher non-interest income for banks this year.
"We forecast industry ROE to reach a new high of 16.3 per cent by 2012, driven by overall revenue drivers, in particular non-interest income," it added.
HwangDBS's pick for "Regional Malaysian Banks" is Malayan Banking Bhd, which has been accorded a "buy" call and a target price of RM10.80.
"But, Malayan Banking would still offer an element of positive surprises and carries Indonesia as a multi-year growth story," it said, adding that CIMB was also considered as having done well and a proxy for Asean banks.
The research house also prefered RHB Capital, recommending a buy call and target price of RM10 for its attractive valuation, ROE profile as well as possible merger and acquisition angle.
-- Bernama
"We believe loans growth will continue to support net interest income growth amid competitive net interest margin while non-interest income should gear up on capital market activities," it said in a note today.
The research firm said banks were increasingly relying on non-interest income to enhance capital costs and improve ROE while expenses were expected to remain stable and provisions low.
It said projects under the Economic Transformation Programme would drive more fund raising activities this year while mergers and acquisitions transactions could surface with further divesment of government link companies.
Taking cue from the positive momentum last year, HwangDBS expects capital market activities to spur higher non-interest income for banks this year.
"We forecast industry ROE to reach a new high of 16.3 per cent by 2012, driven by overall revenue drivers, in particular non-interest income," it added.
HwangDBS's pick for "Regional Malaysian Banks" is Malayan Banking Bhd, which has been accorded a "buy" call and a target price of RM10.80.
"But, Malayan Banking would still offer an element of positive surprises and carries Indonesia as a multi-year growth story," it said, adding that CIMB was also considered as having done well and a proxy for Asean banks.
The research house also prefered RHB Capital, recommending a buy call and target price of RM10 for its attractive valuation, ROE profile as well as possible merger and acquisition angle.
-- Bernama
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