Malaysian Banks' 1Q Earnings Likely Resilient Amid Middle East Tensions — Market Talk

Malaysian banks' 1Q earnings are likely to have remained resilient on year and sequentially, largely insulated from the Middle East conflict that intensified in March, Hong Leong IB analyst Raymond Ng says in a note. Sectoral earnings are expected to have grown 2%-4% sequentially and 7%-9% on year, supported by steady net interest income, robust non-interest income and easing margin pressures, he says. The small-and-medium-enterprises segment's headwinds from higher energy costs amid the Iran war will be likely manageable due to strong loan-loss coverage and diversified portfolios, he reckons. Hong Leong maintains its overweight rating on Malaysian banks, advocating a selective approach and pegging CIMB and AMMB as its top picks, citing their strong capital upside and attractive dividend yields exceeding 6.5%. (yingxian.wong@wsj.com)