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| Sector Update - Banking (NEUTRAL,maintain) - June 2014: Repayments weigh down loan growth The banking system�s loan growth of 3.8% ytd Jun-14, of which translates into an annualized growth of 7.6%, continued to lag behind our 2014 target of 9.5%. As the pace of Jan-Jun 2014 loan repayments (+22.9% yoy) was ahead total loan disbursements, which rose by a weaker +13.6% yoy, this has continued to weigh down on system loan growth. In our view, it is likely that banks with bigger exposure to the corporate segment will potentially experience a weaker loan growth this year. We maintain a NEUTRAL rating on the Malaysia banking sector as a re-rating will be tough for banks in 2H14 on the back of weaker trading/investment gains, slower loans growth momentum and a tighter liquidity situation. Nonetheless, the drive for further consolidation within the sector could bring excitement and drive valuations higher. We favour AFG and HLB for their valuations, business models and niche.
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| Debt Market Research - Speed bumps ahead, softer tone following FOMC statement, implied volatility rising
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