MBSB: Keeps mum about merger. The company’s president and CEO, Datuk Ahmad Zaini Othman kept mum about questions yesterday on the potential M&A of MBSB with Asian Finance Bank (AFB), saying

SECTOR RESEARCH Malaysia Banking | A fair 3Q16, but challenges persist Desmond Ch'ng

NEWS Outside Malaysia Other News

SECTOR RESEARCH MY: Malaysia Banking A fair 3Q16, but challenges persist by Desmond Ch'ng Sector Note The biggest challenge into 2017 would still be in managing asset quality in an environment of ongoing economic uncertainty, particularly on the external front. Domestically, the weaker MYR and spike in bond yields pose short-term earnings risks in the form of potential mark-to-market losses on investments and borrowings. With sector core earnings growth trending at 3-4% in 2016/2017, we expect pressure on ROEs to persist. NEUTRAL still on the sector, with BUYs on AFG, HL Bank, BIMB. Desmond Ch'ng    (603) 2297 8680    desmond.chng@maybank-ib.com

NEWS Outside Malaysia: U.S: Service industries grow at fastest pace in 13 months. America’s service industries expanded in November at the fastest clip since October of last year, putting the economy’s biggest sector on a robust growth path. The Institute for Supply Management’s non-manufacturing index jumped to 57.2 from 54.8 in October, the Tempe, Arizona-based group’s data showed. Readings above 50 signal growth. (Source: Bloomberg) E.U: Euro-area economy expanded at the fastest pace this year in November as companies took on workers and kept political concerns at bay. A Purchasing Managers’ Index for manufacturing and services rose to 53.9 from 53.3 a month earlier, IHS Markit said. While that’s slightly below a previous estimate of 54.1, it still marks the highest level in 11 months. (Source: Bloomberg) E.U: ECB buys record amount of debt as QE frontloaded before holidays. The European Central Bank bought a record monthly amount of assets under its quantitative-easing program in November in an attempt to frontload purchases before market liquidity may dry up during the holiday season. The ECB bought a total of EUR 85.4b (USD 91.6b) of debt last month even as the pace of purchases of government bonds, which represent the bulk of the program, dropped to EUR 70.1b from EUR 73b in October, ECB data published showed. An increase in monthly buying of covered bonds, asset-backed securities and corporate debt helped to make up for the difference. (Source: Bloomberg) U.K: Services sector grew at the fastest pace in 10 months in November, keeping the economy on track to maintain its pace of expansion this quarter. IHS Markit’s activity gauge rose to 55.2 from 54.5 in October, beating the median forecast of economists for a reading of 54. An all-sector index that includes construction and manufacturing also rose to a 10-month high, indicating economic growth of 0.5% in the three months through December. (Source: Bloomberg) Other News: MBSB: Keeps mum about merger. The company’s president and CEO, Datuk Ahmad Zaini Othman kept mum about questions yesterday on the potential M&A of MBSB with Asian Finance Bank (AFB), saying only it is now a shareholder matter. He said, “This is something that management cannot really comment until shareholders give us the green light”. He also added that it all depends on the pricing. The Edge reported that MBSB and AFB are in exploratory M&A talks and that had written in to seek the central bank’s approval in early November. On a side note, MBSB is shifting their corporate portfolio, focusing mainly on property financing in the corporate lending segment, targeting to boost its corporate lending portfolio to 30% within one to two years, from 20% currently. (Source: The Edge Financial Daily) Asiamet Education Group: To acquire Cyberjaya University College. The company is buying over Cyberjaya University College of Medical Sciences (CUCMS) from SMRT Holdings and its wholly-owned subsidiary SMR Education Sdn Bhd (SESB) for MYR166m in an all share deal. Asiamet Education said it will pay for the acquisition of the internationally recognized medical school via the issuance of 830 million shares in the company to SESB, which will see the latter emerge with a 48% stake in the group. The proposals are expected to be completed by 2Q17. (Source: The Star) Bina Darulaman: Exploring into pocket developments. The company is looking towards developing small pockets of land amid the current soft property market, taking advantage of faster turnaround rate and better margins. While the company will continue to focus on townships via its subsidiary BDB Land Sdn Bhd, the group’s CEO, Datuk Izham Yusoff said that the other group subsidiary, Kedah Holdings Sdn Bhd will be focused on identifying and developing pockets of land. The group will be launching one such project in January next year, located in Kuala Kangsar, with an estimated GDV worth MYR30m. For year 2017, the company has lined up launches of MYR900m in GDV where 80% of its launches will comprise affordable housing units priced below MYR500k. (Source: The Edge Financial Daily)