Monday, March 21, 2011

CIMB (Buy, TP: RM9.77) and Maybank (Buy, TP: RM10.07) by OSK

KUALA LUMPUR: OSK Research is maintaining its Buy on the banking sector as loans growth remains largely intact at a forecast at 9% to 10%.

It said on Monday, March 21 the boost from the Economic Transformation Programme related loans and fixed income securities has yet to be imputed into its loans and non-interests income growth assumptions.

'Loans loss provisions are expected to continue on a downtrend on the back of improving asset quality. The key risk lies in larger than expected margin pressure, sustained weakness in the capital markets and sudden surge in foreign hot money outflow from Malaysian government securities, which will affect banks' bond trading profits as a result of a spike in bond yields,' it said.

The report was issued after Bank Negara Malaysia announced a number new credit card to encourage more prudent financial management among credit card users and also additional measures that encourage more responsible business practices among credit card issuers.

OSK Research said its large cap banking top picks are CIMB (Buy, TP: RM9.77) and Maybank (Buy, TP: RM10.07), while the midcap pick is RHBCap (Buy, TP: RM9.56).

Source: The Edge, 21 March 2011

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