KUALA LUMPUR (April 7): AffinHwang Capital Research has  upgrade the Malaysian banking sector to “Overweight” (from Neutral), and said it now sees a positive changing tide happening in 2017.

In a note today, the research house said it expects sector earnings to bottom out in 1Q17E, on the back of steady NIMs, stabilizing credit costs, peaking NPLs and improving cost-to-income ratios with credit growth turning more robust.

“We look for 2017E earnings to grow by 10.9% year-on-year (y-o-y) off the low base in 2016, and by 3.6% y-o-y in 2018E.

“Public Bank Bhd remains a top pick, to which we add CIMB Group Holdings Bhd, Malayan Banking Bhd, Allliance Financial Group Bhd, Hong Leong Bank Bhd, all upgraded to Buy,” it said.