Malaysian banks extend double digit net gains

Malaysian banks continue their double-digit net earnings growth to a fifth straight quarter.

According to CIMB Research, the banks posted a 20.1 per cent year-on-year growth in the third quarter of this year.

The positive trend reflected the favourable operating environment of strong loans growth of above 11 per cent, active capital markets and stable asset quality, which enabled banks to achieve their projected core net profit growth of 27.9 per cent this year and 16.3 per cent next year.

Against this buoyant backdrop, we reaffirm our overweight stance on the sector predicated on the potential re-rating catalysts of strong earnings growth, higher investment banking income, better growth prospects for overseas operations, potential gross profit write-backs, and upside potential to dividend forecasts, the analyst said in a report.