STOCK FOCUS OF THE DAY
Banking Sector : Key loan indicators remain soft
NEUTRAL
Industry loan growth continues to moderate. The trend of
slowdown in industry loan growth continues with a growth of +5.6% YoY in June
2016 contributed by the slowdown in both business and household loans. Growth
in loan applications was slower while loan approvals continued to be weak in
June. On loan applications, the improved loan demand from the non-household
loan applications was offset by slower growth in household loan applications.
Elsewhere, loan disbursement slowed down significantly while loan repayments
were slower in pace compared to the preceding month. Industry deposit growth
continued to be subdued at -0.5%YoY and is likely to remain slow for the
remainder of CY16. There were outflows of deposits in June contributed by a
contraction in deposits of business enterprises. Industry CASA ratio inched up
slightly to 25.9% but CASA growth remain flattish at -0.4%YoY. Industry
liquidity continues to be tight with a LD ratio of 87.8%. The industry’s
average lending rate and interest spread widened in June but it is expected to
decline in July due to Monetary Policy Committee’s decision to reduce the OPR
by 25bps to 3.00%.
On concerns of banks’ exposure to Swiber Holdings which has
filed for liquidation, we gather that RHB Bank’s exposure to Oil & Gas
sector is 2.7% of its total loan book with exposure to Oil & Gas Companies
(including Swiber Holdings) of circa SGD500m. Meanwhile, for Maybank its
exposure to the Singapore companies in energy and shipping sector comprises
4.8% of its Singapore loan book which equates to 1.2% of the Group’s total
loans. Both RHB Bank and Maybank’s exposure to Swiber is in the form of holding
of debt papers, hence is not expected to impact credit cost but is expected to
cause an increase in impairment of securities on 2Q16 or 3Q16
earnings.
Maintain NEUTRAL on the sector. Our buys are on CIMB Group
(Fair Value: RM5.50) and RHB Bank (Fair Value: RM6.30).
Others :
Hartalega Holdings : 1Q17 - Rebounds from the low
HOLD
Digi.Com : 8GB of video streaming for Digi Live
prepaid HOLD
QUICK TAKE
Sime Darby : Signs MoU on property project in
Indonesia
HOLD
ECONOMIC HIGHLIGHTS
Japan : Is Japan back to the Keynesian school?
NEWS HIGHLIGHTS
Press Metal : Gets RM115mil in insurance claim for Samalaju
fire
KPJ Healthcare : Explores setting up oncology centre in
Indonesia
Sunway : Plans RM5bil projects in Penang
Airline Sector : AirAsia X carries 27% more passengers in 2Q
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