KUALA LUMPUR, Oct 4 — MIDF Research is maintaining a “positive” call on the banking sector as loan applications and approvals hit new highs this month.
In a note today, the research house said while the second half of 2023 has its fair share of deposit competition, asset quality and provisioning-related headwinds, banks have guided for a stronger corporate loan pipeline, lighter operating expenses and steady non-interest income outlook to buoy the sector.
“Dividend yields, as usual, remain highly attractive, especially with the recent negative share repricing,” it said.
MIDF Research said hire purchases, residential mortgages and unsecured loans continued to boast exceptional figures.
While there were some weaknesses in business loans, the research house noted the high base effects from last year.
“Overall, loan growth continues to be sluggish, though sequential month growth is more promising,” it said.
As for deposits, MIDF Research said there were some rundown in fixed deposits (FDs) but current account savings accounts showed month-on-month (m-o-m)growth.
It said FDs grew at 7.2 per cent year-on-year but shrank 0.6 per cent on a m-o-m basis, suggesting that banks were likely continuing to let pricier FDs expire.
On another note, the research house said the liquidity coverage ratio, which refers to the proportion of highly liquid assets held by financial institutions to ensure their ongoing ability to meet short-term obligations, showed a notable decline.
The gross impaired loan ratio saw a minor uptick of two basis points m-o-m, but there was a notable deterioration in working capital segment, it added.
— Bernama
