Sep 22, 2015

Malaysian Banking Sector Review

Investment Highlights


  - Ongoing downward trend for foreign shareholding of banking stocks in the last two months. Based on the latest available data, the banks have continued to experience a downward trend in terms of foreign shareholdings in recent months.
  - CIMB’s foreign shareholding touching new lows. CIMB’s foreign shareholding had declined further to 28.5% in August 2015, from 29.0% in July 2015. This signals a new multi-year low (see chart in following page).
- Maybank’s foreign shareholding fell below 20% towards end-August 2015. Maybank’s foreign shareholding fell below the 20% level, to 19.86% towards end-August 2015 and was at 19.94% in the first week of September 2015, vs.20.88% as at end-July 2015. To recap, Maybank’s foreign shareholding had remained relatively stable within the 21% to 22% range over the past one year prior to this.
  - Public Bank’s and Hong Leong Bank’s latest foreign shareholding data are still the June 2015 quarter. The latest available data for Public Bank’s (PBB) and Hong Leong Bank’s (HLBB) foreign shareholdings are still at the June 2015 quarter. Recall that PBB’s foreign shareholding came off slightly to 31.51% in June 2015, following an increase to 32.0% in March 2015, from 30.99% as at end-December 2014. As for mid-cap HLBB, the foreign shareholding reversed an upward trend to close at 8.75% in June 2015, from 9.11% in March 2015 and a recent peak of 9.5% in December 2014. HLBB’s December 2014’s foreign shareholding was at the highest level in the past seven years. Historically, HLBB’s foreign shareholding usually ranged between 7% and 8%.
- RHB Cap’s foreign shareholding continued to slip. RHB Cap’s foreign shareholding continued to slip, to 8.03% as at end-August 2015, from 8.50% at end-July 2015 and 8.62% at end-June 2015. Its recent peak was at 9.81% in November 2014.
- AFG’s foreign shareholding stable in the past three months. AFG’s foreign shareholding has been stable in recent months, hovering at 29.5% in August 2015, up marginally from 29.4% as at end-July 2015 and 29.3% in June 2015.
  We maintain NEUTRAL on the sector, as we expect impaired loans and loan loss provisioning to be key ongoing concerns for the banks.

Banking Stocks Valuation (click to enlarge)
banking stocks valuation
by AMResearch 22/09/15