KUALA LUMPUR, Sept 1 ― Kenanga Investment Bank Bhd remains confident that banking stocks will stay resilient in a rising interest rate environment and would lift the overall profitability of the sector.
“The banks will also benefit from lower impairment allowances as asset quality risks diminish, leading to lower provisions,” it said. As such, Kenanga Investment has maintained its “Overweight” call on the banking sector, with top picks leaning towards dividend counters to shelter against uncertainties, being Maybank and Affin Bank.
For the smaller cap banks, it believed Affin Bank presents opportunities with the return of earnings growth prospects, thanks to its Affinity in Motion initiatives. “Household loans continued to increase but we believe it could taper off slightly on higher interest rates in subsequent months. This is also indicative of the slowing applications here while business loans remain supported by increasing working capital requirements,” it said.