Tuesday 19 Mar 2024
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KUALA LUMPUR (Oct 22): Public Bank Bhd's loan growth could be most affected by a slowdown in non-residential mortgages (NRMs) against a backdrop of oversupply of commercial properties in Malaysia, according to CIMB Research.

This is because Public Bank has the highest proportion of NRMs among local banks, comprising 25.8% of total loans as at end-2017, CIMB Research analyst Winson Ng wrote in a note Oct 19.

Meanwhile, "Affin Bank Bhd could be the most negatively affected by any increase in credit cost for NRM because at end-2017, its NRM gross impaired loan ratio was the highest among the local banks that we cover," Ng said.

Malayan Banking Bhd would be least affected as NRMs account for only 8.3% of its total loans as at end-2017, while RHB Bank Bhd recorded the fastest expansion in NRMs, which have almost tripled over the past five years, he added.

"While the commercial property glut is likely to have minimal negative impact on the banks, we are concerned about other earnings risks such as margin erosion and weak loan growth," Ng said.

He was commenting on Bank Negara Malaysia's concerns over the oversupply of commercial properties in Malaysia in its Financial Stability Review report for the first half of 2018, which was published last month.

CIMB Research retained its neutral outlook on Malaysia's banking sector, with RHB Bank as its top pick due to attractive valuations and positive changes from its transformation programme.

At 10.02am, Public Bank dipped 0.16% or 4 sen to RM24.96 while Affin fell 2.17% or 5 sen to RM2.25.

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