Maybank IB Research expects cumulative net profit for local banks to rebound 18% in 2023.
Moving forward, Maybank Investment Bank Research expects cumulative net profit for local banks to rebound 18% in 2023, despite maintaining elevated credit cost assumptions in anticipation of slower economic growth.Moreover, it said valuations are still sufficiently decent to warrant a positive stance on the sector, supported by a rising return on equity and comfortable dividend yields.
The only setback, it noted, was that most banks saw negative JAWS as overheads had started to normalise, while Cukai Makmur continued to dampen earnings. “Hypothetically, assuming a default rate of 20% and a loss given default rate of 30% on Repayment Assistance or RA loans, pre-emptive provision levels would be sufficient to cover 101% to 325% of potential defaults,” it added.
Meanwhile, Hong Leong Investment Bank Research sees 2021 to 23 sector profit growing at a two-year compound annual growth rate of 9.7%.
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