“Going forward, we see the gross impaired loan ratio continuing to creep up but would not be overly concerned since banks are better equipped versus prior slumps.
Meanwhile, Kenanga Research also foresees that the sector-wide weakness among listed banks may lead to investors seeking more tactical opportunities than fundamental ones in 3Q23. “Still, we continue to have confidence in the banking space for its resilient earnings and with an average dividend yield of 6% providing attractive shelter for longer-term investors amidst the softening favour for the space,” it said.It noted that the banking system’s loans grew by 4.8% year-on-year in May 2023, within its 4% to 4.5% target.
“GIL still appears manageable at 1.8% despite a slight increase as provisions and loan loss coverage readings remain adequate.