Banking sector update – Acing any stress test
Banks’ loan growth was sustained at a yoy pace of 8.4% in Jul 09 (8.3% in Jun 09), supported by the rise in loans classified as “others”. But the annual pace for the key loan segments eased marginally. Meanwhile, the 3-month net NPL ratio inched down 10bp mom and 48bp yoy to 2.1% in Jul 09. Due to the still-benign NPLs, we are cutting our 2009 projection of industry gross NPL ratio from 6.6% to 5.4%. However, we are keeping our projected loan growth for 2009 at 5-6% as the momentum for business and consumer loans weakened in Jul 09. We maintain our OVERWEIGHT stance on the sector, predicated on the potential re-rating catalysts of (1) a revival of earnings growth in 2010, (2) recovery in investment banking income, (3) benefits of banks’ transformation programmes, and (4) growth potential in overseas operations. AMMB remains our top pick.
Results – Axiata Group 2QFY09 above – A strong 2Q across the board
Results – Bintulu Port 2QFY09 below – Hit by one-off storm
Results – Carlsberg Brewery 2QFY09 below – No reason to cheer in 2Q
Results – Kurnia Asia 4QFY09 above – TOPping expectations
Results – Lafarge Malayan Cement 2QFY09 in line – Share price on shaky ground
Results – LCL Corp 2QFY09 below – Decorated in red ink
Results – Metrod 2QFY09 below – Slow progress
Results – MRCB 2QFY09 above – At the start of the S-curve
Results – MTD-ACPI 1QFY10 in line – Finally in the black
Results – Nestle 2QFY09 in line – Easy-to-digest results
Results – Sime Darby 4QFY09 above – Outperforming its KPI
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