Kenanga Research maintains "overweight" call on the banking sector

Kenanga Research has maintained its "overweight" call on the banking sector, as it believes the local banking group will do well in the current conducive banking system with their strong balance sheets and improving earnings.

"We are seeing more evidence that the 'Responsible Lending Guidelines' by Bank Negara Malaysia is already bringing some changes to the banking industry arena," the research firm said in a note.

It expects the softer trading conditions at present to persist in the short term, and, if markets do recover, Maybank and CIMB should see the biggest recovery in their non-interest income earnings in the industry.

Kenanga Research has 'outperform' calls on Maybank with a target price (TP) of RM10.40, PBBANK (TP:RM15.60), RHBCAP (TP:RM8.30), CIMB (TP:RM8.20), AMMB (TP:RM7.40), AFFIN (TP:RM4.40) and BIMB (TP:3.60).

AFG (TP:RM4.00) and HLBANK (TP:RM15.20) are rated as 'neutral'.