KUALA LUMPUR: The banking sector's profits is expected to grow at a slower rate of 6 per cent in 2024, without a meaningful recovery in net interest margin and slowing non-interest income growth.
Hong Leong Investment Bank research said it also expects no write-back in net credit costs (NCC).
Sector profit grew 15 per cent in 2023.
"Regardless, valuations are not excessive and hence, we feel it is too premature to turn full-on bearish," the firm said.
Currently, HLIB research only has a "Buy" rating on Public Bank Bhd for its defensive qualities and multi-year low foreign shareholding.
It has a target price of RM4.80 for the bank.
HLIB research favours AMMB Holdings Bhd for mid-sized banks, for its dividend payout bandwidth in the near future.
It has a target price of RM4.60 a share for the stock.
For small banks, it favours Alliance Bank Bhd given its inexpensive valuations. It has a target price of RM3.95 a share, for the company's stock.
"In our view, the risk-reward now is more balanced as there are no new positive catalysts to spur share prices significantly higher," HLIB research said.