KUALA LUMPUR (Dec 10): Affin Hwang Capital Research has downgraded the Malaysian banking sector to “Neutral” and said the banking sector reported 3Q18 core net profit of RM6.37 billion, up 1.3% year-on-year (y-o-y) and was a rebound of 3.3% quarter-on-quarter (q-o-q).

In a sector update today, the research house said it saw more positives in 3Q18 versus 2Q18, even though non-interest income continued to decline q-o-q and y-o-y.

It said fund-based income sustained a marginal growth yoy and qoq (+1.6% y-o-y).

“NIM pressure eased as well on a q-o-q basis, though for some banks, the pressure mounted.

“Provisions for most banks were gradually inching up q-o-q in 3Q18 (except for Maybank), with the 9M18 trend down 21% y-o-y.

“In our recent market strategy, we have downgraded the banking sector from Overweight to Neutral, due to rising headwinds,” it said.