Banking stocks slip on profit-taking amid sector's expected improvement in 2017

Banking stocks slip on profit-taking amid sector's expected improvement in 2017
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KUALA LUMPUR (March 9): Banking stocks on Bursa Malaysia slipped on profit-taking this morning, as analysts issued positive notes on the sector’s improved performance in the last financial quarter for the year ended December 2016 (4QFY16).

At 12.03pm, Public Bank Bhd slipped six sen or 0.3% to RM19.86, with 957,100 shares done, for a market capitalisation of RM76.6 billion.

Malayan Banking Bhd fell three sen or 0.34% to RM8.80, with 2.7 million shares exchanged, for a market capitalisation of RM89.6 billion.

BIMB Holdings Bhd dipped two sen or 0.02% to RM4.40, with 81,300 shares traded, valuing it at RM7.2 billion.

Hong Leong Bank Bhd shed two sen or 0.15% to RM13.38, with 125,200 shares exchanging hands, valuing it at RM27.5 billion.

Affin Holdings Bhd dropped one sen or 0.35% to RM2.87, with 1.02 million shars done, for a market capitalisation of RM5.6 billion.

On the other hand, CIMB Group rose two sen or 0.37% to RM5.39, with 2.9 million shares transacted, for a market capitalisation of RM47.8 billion.

A remisier with a local bank told that banking stocks would have seen profit-taking on the recent share price spike.

He said the dip could also be due to an exposure to the oil and gas stocks that may also impact it.

MIDF Reseach upgraded its rating to positive on the sector from neutral, as it found that the sector has turned around the corner, with some upside surprises expected this year.

“We expect recovery in earnings in most banks and our views are reinforced by the 4QCY16 results, which suggest good momentum for 2017. Valuations of banks are depressed at the moment. However, we believe they are inching up to its long term averages,” it said in a note today.

In the meantime, Kenanga Research kept a neutral call on the sector, based on prevailing challenges in the economy.

However, it noted six out of nine banking stocks under its coverage met its expectations (67%), with two exceeding and one below.

In 4QFY16, Kenanga saw slower earnings, contracting liquidity, widened net interest margins, improved non-interest income (NOII), continued improvement in cost income ratio (CIR), deteriorated asset quality, as well as still challenging credit costs.