Downside risks from supply chain disruptions amid geopolitical tensions over the next 3-12 months should remain manageable for Malaysia's banking sector, supported by strong balance sheets and ample system buffers, CIMB Securities analyst Ei Leen Tan says in a note. The impact could emerge gradually rather than through a sharp deterioration in asset quality, giving banks time to adopt a more defensive strategy and adjust loan exposure, she says. Loans to sectors vulnerable to supply chain disruptions account for 18.3% of total lending, while loan loss coverage remains above 100% for most banks, providing a buffer against rising credit costs, she reckons. CIMB maintains an overweight rating on the banking sector as it remains highly defensive, and pegs RHB Bank, Public Bank and Hong Leong Bank as its top picks. (yingxian.wong@wsj.com)