Earnings Insight: Are Banking Stocks a Safe Haven in the Bursa Market?

Moomoo News MY wrote a column · Mar 5 10:12

Stability in Growth: Macroeconomic Fundamentals Set the Stage

Dividend Policies & Returns: Decoding Core Metrics

Earnings Deep Dive: Banking Sector Highlights

Future Outlook: Where Is the Industry Headed?

Amid a complex global economic landscape in 2024, Malaysia’s domestic economy has demonstrated remarkable resilience. This stability provides a robust foundation for the banking sector’s growth and reinforces investor confidence.

Macroeconomic Backdrop: A Platform for Stability

Malaysia’s economy in 2024 remains resilient, driven by steady domestic demand, recovery in tourism and services, and active infrastructure investments by both government and private sectors.

These factors underpin expectations for continued growth in 2025, with GDP projected to expand between 4.5% and 5.0%—a favorable environment for banking sector performance.

The Overnight Policy Rate (OPR), held at 3.00% by Bank Negara Malaysia (BNM), supports stable Net Interest Margins (NIM) for banks, enabling sustainable credit growth while balancing inflationary pressures.

Dividend Policies & Returns: Why Investors Are Taking Notice

Dividends remain a cornerstone of investor returns, and Malaysia’s banking sector delivered strongly in 2024. Multiple institutions announced record dividend payouts, reflecting both profitability and shareholder-friendly policies.

Over the past five years, banking stocks have outperformed significantly. The share price of $CIMB (1023.MY)$ has soared by as much as 102.56%. If we had invested 10,000 Malaysian Ringgit in 2020, the current return would have more than doubled.

Earnings Insight: Are Banking Stocks a Safe Haven in the Bursa Market?

Key Highlights:

$MAYBANK (1155.MY)$

Declared a second interim dividend of 32 sen/share (total 2024 payout: 61 sen/share), with a 73.0% payout ratio and 6.0% dividend yield.

$CIMB (1023.MY)$

Second interim dividend of 20.00 sen/share (total 2024: 47.00 sen/share), marking a historic RM5.04 billion payout.

$PBBANK (1295.MY)$

Two interim dividends totaling 21.0 sen/share (RM4.08 billion), representing 57.0% of net profit.

$RHBBANK (1066.MY)$

Second interim dividend of 28 sen/share (total 2024: 43 sen/share), its highest-ever annual payout.

$HLBANK (5819.MY)$

Interim dividend of 28.0 sen/share for H1FY25.

Earnings Deep Dive: Sector Performance Unpacked

Let’s dissect the “report cards” of Malaysia’s banking leaders:

Profitability: Who Leads in Earnings Power?

$MAYBANK (1155.MY)$: Net profit hit RM10.09 billion (+7.9% YoY), a record high.

$CIMB (1023.MY)$: Net profit surged 10.7% YoY to RM7.73 billion.

$PBBANK (1295.MY)$: Steady growth with net profit at RM7.15 billion (+7.5% YoY).

$HLBANK (5819.MY)$: H1FY25 net profit rose 5.7% to RM2.24 billion.

$RHBBANK (1066.MY)$: Full-year profit reached RM3.12 billion.

Asset Quality: Balancing Risk & Resilience

Public Bank and Hong Leong Bank lead with NPL ratios of 0.50% and 0.55%, respectively, reflecting superior risk management.

CIMB improved its NPL ratio to 2.1% (from 2.3% in 2023), while Maybank reduced its ratio to 1.23% (from 1.34%).

Growth Metrics: Loans, Deposits & Beyond

Loan Growth:

Hong Leong Bank: +7.7% in H1FY25.

Public Bank: +6.3% (domestic loans +6.7%, outperforming peers).

CIMB and Maybank: +4.8% and +5.3%, respectively.

Deposit Growth:

Hong Leong Bank: +7.4% in H1FY25.

Public Bank: +4.9%.

Non-Interest Income: Diversification Wins

$HLBANK (5819.MY)$ shines with a 31.3% surge in fee-based income, signaling success in expanding wealth management and digital services.

$PBBANK (1295.MY)$ (+15.2%) and $CIMB (1023.MY)$ (+8.1%) also demonstrate progress in diversifying revenue streams.

Future Outlook: Strategic Priorities & Risks

Malaysia’s banking sector stands on solid ground in 2024, supported by macroeconomic stability and disciplined risk management.

With attractive dividends, improving asset quality, and strategic investments in high-growth areas, the sector offers compelling opportunities for investors seeking both income and growth.

As the industry adapts to evolving challenges: digital transformation, ESG priorities, and regional competition, its ability to balance stability with innovation will define weather they can have long term success.

Stay tuned: The next phase of growth is just beginning.

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