CIMB sees 11.6% growth for banking sector next year

Business & Markets 2013
Written by Jeffrey Tan of theedgemalaysia.com
Monday, 09 December 2013 18:37
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KUALA LUMPUR (Dec 9): CIMB Investment Bank Research said it projects a
11.6% net profit growth for the banking sector next year, supported by topline
growth underpinned by a 10.1% expansion in net interest income and 5.5%
growth in non-interest income.
This compares to 9% this year.
In a note today, the research house said loan loss provisioning is expected to
decline by 4.1% but overheads could increase by 8.5%.
Commenting on the banking sector in 3Q FY13, CIMB IB research analyst
Winson Chin Gia Yann said: “It was a relief that banks’ earnings growth
recovered after the slump in the 1H FY13 due to weak sentiment before the
May 13 general elections.”
“However, the results were below our expectations despite core net profit growth improved to 8.5% year-on-year (y-o-y) in 3Q FY13 from
3.2% y-o-y in 2Q FY13.”
Chin said he reiterates his ‘neutral’ call on Malaysian banks, highlighting RHB Capital as his top pick.
He pointed out margin compression will persist and credit costs will rise further in 4Q FY13. But, loan growth should continue to recover in
the next one to two quarters while asset quality remains intact.