Banking Sector : Improved loan demand and approvals NEUTRAL

STOCK FOCUS OF THE DAY

Banking Sector : Improved loan demand and approvals                                  NEUTRAL

Sector loan growth decelerated to 5.3% YoY with a slower pace in household loans while momentum for business loans remained stable. Industry loan growth slipped to 5.3% YoY in February 2017 from 5.6% YoY in the previous month due to softer pace of household loans. For household loans, with exception of improved momentum for personal loans and credit cards, growth in key segments i.e. mortgage loans, loans for purchase of passenger cars and for purchase of securities continued to be slow. February 2017 saw a slightly slower pace of loan disbursements while loan repayments grew at a much faster rate of 7.1% YoY. Level of loan demand and growth in loan applications improved in February 2017. Applications of both household and non-household loans improved to 24.1% YoY and 18.0% YoY respectively. Also higher was the level of approvals for business loans.

Deposit growth slowed down in February 2017 but CASA growth remained steady at 5.8% YoY. Industry deposit growth was slower at 2.2% YoY in February 2017 vs. 2.6% YoY in January 2017. The slowdown was contributed by business enterprises’ deposits which continued to contract by 0.6% YoY, while individual deposit growth decelerated to 5.5% YoY. Industry CASA registered a stable growth of 5.8% YoY. CASA ratio for the sector was higher at 27.1% compared to 26.7% in the preceding month. Maintain NEUTRAL on the sector and remain selective on banking stocks with BUYs on CIMB and RHB Bank. Maintain NEUTRAL on the sector. CIMB (fair value: RM6.30/share) and RHB Bank (fair value: RM6.00/share) remained as our BUY calls. We continue to like these two stocks due to compelling valuations, decent ROEs and potentially further improvements to CI ratios from cost initiatives.

Others :

Sapura Energy : Outperformance from higher crude price and output     HOLD

QUICK TAKES

DRB-Hicom : Proton looking for more funds?                                                      HOLD

Genting Malaysia : Issues RM2.6bil MTN                                                               HOLD

Plantation Sector : Another record US soybean harvest(US)                        NEUTRAL

Plantation Sector : Newsflow for week 27 to 31 March (Newsflow)          NEUTRAL

STOCKS ON RADAR

Three-A Resources,LBS Bina Group,Karex,Hibiscus Petroleum

NEWS HIGHLIGHTS

Construction Sector : Construction jobs tendered out not hitting targeted RM200bil

Aerospace Sector : Tier-one US aerospace firm to invest in Malaysia

DISCLAIMER:

The information and opinions in this report were prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.

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