Latest news with #MalaysianGovernmentSecurities
The Star
a day ago
- Business
- The Star
Deposit costs to buoy Affin Bank
HLIB Research said Affin's loan pipeline remains robust at about RM9bil. PETALING JAYA: Affin Bank Bhd 's net interest income (NIM) is expected to remain resilient in the lender's upcoming second quarter (2Q25) earnings announcement, analysts say. Affin's NIM is expected to be underpinned by a solid loan base, said Hong Leong Investment Bank Research (HLIB Research). Despite some churn, the research house said Affin's loan pipeline remains robust at about RM9bil. 'Concurrently, 2Q25 NIM is expected to remain stable sequentially as proactive cost of funds optimisation efforts are set to largely offset any asset yield pressure from loan competition. 'Meanwhile, with the yields for 10-year Malaysian Government Securities currently still below 3.5%, there's significant room for Affin to capitalise on favourable trading opportunities,' HLIB Research said in a report. HLIB Research also expects the bank's gross credit cost to remain stable, supported by steady asset quality. Additionally, improved recovery momentum should help keep net credit costs within single digits for this financial year (FY25). 'We maintain our 'buy' rating on Affin, with an unchanged target price of RM3, implying a 0.60 time FY26 price-to-book value. 'We believe the bank is on the cusp of a notable enhancement in profitability, primarily driven by a fundamental shift in its funding mix, alongside a robust loan pipeline and enhanced operational efficiencies, which are set to drive return on equity.' The research house said while sector-wide asset yields have gradually declined, Affin's primary challenge and significant opportunity lie in managing its cost of deposits. It said liquidity following the cut in the Statutory Reserve Requirement could partially offset the impact of the recent 25 basis points (bps) cut in the overnight policy rate (OPR) . Deposit competition is easing and Affin is expected to benefit from an increase in low-cost current account and savings account deposits, driven by inflows from Sarawak, the bank's major shareholder. This is estimated at around RM130mil per month by 3Q25. According to HLIB Research, this allows the bank to shift from costly promotional rates for deposits to lower-cost payroll-based accounts, helping build a more stable and cheaper funding base. 'Interestingly, our tracker on retail fixed deposit (FD) promotional rates showed that after the 25bps OPR cut on July 9, Affin aggressively slashed its FD promotional rates by between 35bps and 50bps, whereas peers only cut up to 25bps. 'This steeper reduction suggests a deliberate strategy, likely driven by the anticipation of cheaper funding sources coming online, which enables Affin to reduce reliance on higher-cost deposits,' the research house said.
Barnama
6 days ago
- Business
- Barnama
Foreign Investors Remain Significant Net Buyers In First Half, Contribute Net Inflow Of RM21.4 Bln
BUSINESS KUALA LUMPUR, July 18 (Bernama) -- Foreign investors remained significant net buyers in the first half of 2025, contributing a cumulative net inflow of RM21.4 billion year-to-date June 2025, said RAM Ratings Services Bhd (RAM Ratings). However, foreign holdings of Malaysian bonds eased to RM5.4 billion in June, reversing strong inflows of RM13.4 billion recorded in May, amid weaker investor sentiment due to US tariff uncertainty. 'This was primarily driven by selloffs of both long-term Malaysian Government Securities (MGS) and Government Investment Issues (GII), as well as short-term Malaysian Treasury Bills (MTB) and Malaysian Islamic Treasury Bills (MITB), which respectively amounted to RM5.3 billion and RM1 billion. 'Conversely, corporate bonds continued to attract foreign investments, which posted a net inflow of RM903.4 million (May: RM550 million),' it said in a statement. The credit rating agency said, however, that this was only the second month in 2025 to see an overall net foreign outflow, after February's RM1.1 billion. Furthermore, it said foreign investor interest could stay muted in July as the Aug 1 deadline for higher US reciprocal tariff rates looms and uncertainty remains over whether Malaysia can strike a deal before then. Growing expectation of a longer pause in the US monetary policy easing, given the hotter-than-anticipated July inflation print, also dulls the attractiveness of emerging market assets. 'Markets currently expect the US Federal Reserve (Fed) to keep the policy rate unchanged at 4.25-4.5 per cent at the upcoming July Federal Open Market Committee meeting,' RAM Ratings added. RAM Ratings said waning hopes of a Fed rate cut this month strengthened the greenback. As of July 17, the ringgit weakened moderately to 4.25 against the US dollar (end-June: 4.21).
The Star
6 days ago
- Business
- The Star
Foreign investors remain significant net buyers in 1H25, contribute net inflow of RM21.4bil
KUALA LUMPUR: Foreign investors remained significant net buyers in the first half of 2025, contributing a cumulative net inflow of RM21.4 billion year-to-date June 2025, said RAM Ratings Services Bhd (RAM Ratings). However, foreign holdings of Malaysian bonds eased to RM5.4 billion in June, reversing strong inflows of RM13.4 billion recorded in May, amid weaker investor sentiment due to US tariff uncertainty. "This was primarily driven by selloffs of both long-term Malaysian Government Securities (MGS) and Government Investment Issues (GII), as well as short-term Malaysian Treasury Bills (MTB) and Malaysian Islamic Treasury Bills (MITB), which respectively amounted to RM5.3 billion and RM1 billion. "Conversely, corporate bonds continued to attract foreign investments, which posted a net inflow of RM903.4 million (May: RM550 million),' it said in a statement. The credit rating agency said, however, that this was only the second month in 2025 to see an overall net foreign outflow, after February's RM1.1 billion. Furthermore, it said foreign investor interest could stay muted in July as the Aug 1 deadline for higher US reciprocal tariff rates looms and uncertainty remains over whether Malaysia can strike a deal before then. Growing expectation of a longer pause in the US monetary policy easing, given the hotter-than-anticipated July inflation print, also dulls the attractiveness of emerging market assets. "Markets currently expect the US Federal Reserve (Fed) to keep the policy rate unchanged at 4.25-4.5 per cent at the upcoming July Federal Open Market Committee meeting,' RAM Ratings added. RAM Ratings said waning hopes of a Fed rate cut this month strengthened the greenback. As of July 17, the ringgit weakened moderately to 4.25 against the US dollar (end-June: 4.21). - Bernama
New Straits Times
6 days ago
- Business
- New Straits Times
Foreign investors pull RM5.4bil from Malaysian bonds in June
KUALA LUMPUR: Foreign holdings of Malaysian bonds fell by RM5.4 billion in June, reversing strong inflows of RM13.4 billion recorded in May, according to RAM Ratings. In a statement today, the rating agency said this was amid weaker investor sentiment over when US reciprocal tariffs will take effect, as the initial deadline looms. "This was primarily driven by selloffs of both long-term Malaysian Government Securities (MGS) and Government Investment Issues (GII) and short-term Malaysian Treasury Bills (MTB) and Malaysian Islamic Treasury Bills (MITB), which respectively amounted to RM5.3 billion and RM1.0 billion. "Conversely, corporate bonds continued to attract foreign investments, recording a net inflow of RM903.4 million in June, up from RM550 million in May," it added. However, RAM Ratings said this is only the second month in 2025 to see an overall net foreign outflow, after February's RM1.1 billion. It noted that foreign investors remained major net buyers in the first half of 2025 (1H25), contributing to a cumulative net inflow of RM21.4 billion as of June 2025 year-to-date. Looking ahead, RAM Ratings said foreign investor interest could stay muted in July as the August 1 deadline for higher US reciprocal tariff rates looms and uncertainty remains over whether Malaysia can strike a deal before then. "Growing expectation of a longer pause in US monetary policy easing, given the hotter-than-anticipated July inflation print, also dulls the attractiveness of emerging market assets. "Markets currently expect the US Federal Reserve (Fed) to keep its policy rate unchanged at 4.25 per cent to 4.5 per cent at the upcoming July Federal Open Market Committee (FOMC) meeting. "A rate reduction is now anticipated in September, with the market-assigned probability of a cut rising to 48.3 per cent on July 16, up from around 30 per cent on July 9, according to data from the CME FedWatch Tool," it said. Furthermore, RAM Ratings also said waning hopes of a Federal Reserve rate cut this month strengthened the greenback. It noted that as of July 17, the ringgit had weakened moderately to 4.25 against the US dollar, compared with 4.21 at the end of June.
The Star
15-07-2025
- Business
- The Star
Banking sector viewed as undervalued
PETALING JAYA: Kenanga Research believes the banking sector is fundamentally at a bargain level, as the share prices of the banking stocks are reflecting return on equities commensurating with a loan growth for the system of 3.4% – which was essentially levels seen during Covid-19. 'This, thus, gives us confidence that the banks are undervalued. In the very immediate term, should bull-steepening bias materialise, historically it would be an uphill task for banks to outperform during such a stretch,' it said. Kenanga Research said Bank Negara's overnight policy rate (OPR) cut last week came as a negative surprise to its forecast. However, it shared that based on historical patterns, other than during the Covid-19 period, the FBM KLCI has always bounced back higher post-rate cut on a 12-month basis and the most reliable sector to see outperformance would be banks. It has kept its 1,655 year-end FBM KLCI target for now. The research house's top pick remained AMMB Holdings Bhd , which has prioritised profitability over market share goals. Kenanga Research pointed out that banks' valuations are still appealing, although the immediate catalyst of averting a rate cut didn't play out. 'Our market earnings estimate post-OPR cut is revised lower to 3% from 3.5%, with the adjustments purely made from the perspective of an earnings cut due to putting through net interest margin impact for the banks, which ranged from 0% to 1.7% for financial year 2025 (FY25) and 1% to 4% for FY26 on an annualised basis. 'However, we haven't given any compensating benefit of non-interest operating income or NOII uplift to the banks, which could materialise should banks crystalise some of their bond holdings that may have experienced positive revaluation gains. 'This could spell some upside to our banks' earnings forecast of 3.7%,' it added. Overall, the research house continued to prefer laggard plays within key sectors, as liquidity shored up is being put to use. It said this benefits the likes of YTL Power International Bhd , IJM Corp Bhd , Sime Darby Property Bhd , IHH Healthcare Bhd and CIMB Group Holdings Bhd . Meanwhile, Kenanga Research said utilities generally beat even telecommunications companies, which were relatively steady, while also outstripping the banking sector's returns. 'We also highlight that the utilities sector is not short of catalysts in the near term in the form of new capacity bids and brownfield opportunities. 'We believe Tenaga Nasional Bhd and Malakoff Corp Bhd are strong contenders due to their existing brownfield assets. We also expect YTL Power to be keen to explore new power plant projects,' the research house added. It pointed out that Gas Malaysia Bhd makes a strong argument for being able to offer attractive dividend yields of 5.7%. Kenanga Research also said a rate cut without expectation of an economic contraction is bullish for real estate investment trusts (REITs), but largely priced in current levels of Malaysian Government Securities or MGS. 'Risk to the REIT sector earnings growth would be from the implementation of the service tax, although a rate cut without gross domestic product growth cut would likely be positive for the sector,' it explained.
