HLIB Research less bullish on banking sector, downgrades sector to neutral

Hong Leong Investment Bank Bhd (HLIB Research) is “less bullish” on the local banking sector which it feels is losing its tailwind and has downgraded the sector to neutral from overweight.

“Overall, we turn less bullish on the sector as we see tailwinds dissipating. Also, investment fatigue for banks is building up, considering that ‘BUY’ merits employed for the past one-two years are becoming stale

“Moreover, the KL Finance Index (KLFI) performance is not trending any higher and has been range-bound,” HLIB Research said in a report today.

The research house said it noticed that the banking sector’s leading indicators have moderated despite loan growth rising by a solid pace of 6.5%, while deposits grew quicker at 8.3% year-on-year (YoY).

It pointed out that there will be lesser rate hikes next year while deposit rivalry intensifies and also a softer macroeconomic outlook.

The research firm has only two ‘BUY’ ratings under its coverage, namely for RHB Bank Bhd and BIMB Holdings Bhd. – TMR