Banking stocks dip on gloomier outlook for sector in 2015

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KUALA LUMPUR (Dec 24): Banking stocks including Public Bank Bhd, Hong Leong Bank Bhd, Hong Leong Financial Group Bhd (HLFG), Malayan Banking Bhd (Maybank) and AMMB Holdings Bhd (Ambank) dipped on Thurday morning following a gloomier outlook for the sector in 2015.

The decline also weighed on the FBM KLCI bringing the benchmark index lower to 1,740.73 points after falling 8.32 points or 0.5%.

Yesterday, The Edge Financial Daily reported a slower global growth and lower domestic consumption next year, which is expected to continue to squeeze net interest margins (NIMs) and stifle loan growth.

At 10 am today, Public Bank lost 28 sen or 1.6% to RM17.70 on trades of 167,500 shares. The second top decliner had earlier fallen to a low of RM17.66.

Hong Leong Bank shed 16 sen or 1.1% to RM14.02 on trades of 97,900 shares. The sixth top decliner had earlier slipped to a low of RM13.80.

Meanwhile, its sister firm HLFG fell 12 sen or 0.7% to RM16.30 on trades of 18,800 shares. The tenth top decliner had earlier dipped to a low of RM16.22.

Maybank also declined 6 sen or 0.7% to RM8.90 with 477,200 shares changed hands. Ambank slid 3 sen or 0.5% to RM6.43 with 94,800 shares done.

In a note today, TA Securities maintained its ‘neutral’ rating for the sector with an unchanged earnings projection.

The research house kept a ‘buy’ call for RHB Capital Bhd and Maybank, noting it had upgraded CIMB Group Holdings Bhd to the same rating on the back of ‘compelling’ valuations.

TA Securities however, retained a ‘sell’ recommendation for Affin Holdings Bhd, Hong Leong Bank, Alliance Financial Group Bhd and Public Bank.

According to the daily, M&A Securities Sdn Bhd head of research Rosnani Rasul said that things “could get worse next year” for banks and the industry will simply have to ride out the storm.

CIMB Research analyst Winson Ng too expects banks’ underwhelming earnings seen throughout 2014 to continue into the new year, and holds a “negative” rating on the banking sector.