The foreign banks’ average loan-to-deposit ratio (LDR) stood at around 92%, slightly higher than BNM’s LDR of 89% in 2Q19. The average cost-to-income (CTI) ratio rose to 50.5% for the five foreign banks versus local banks’ average CTI of 48.9% for 2Q19. Prospects of top-line growth continue to be muted by further margin pressure, modest loan growth and lacklustre capital market activities. Despite the weak macro backdrop, the banking sector remains well capitalised and should continue to display resilience in asset quality. Our “buy” calls are maintained for CIMB Group Holdings Bhd, RHB Bank Bhd, Alliance Bank Malaysia Bhd and Affin Bank Bhd, with “hold” for Hong Leong Bank Bhd and Malayan Banking Bhd and “sell” reiterated for Public Bank Bhd.

Source: The Edge Markets October 18, 2019 03:22 UTC