Malaysian banks remained OVERWEIGHT as analysts from RHB Research, MBSB Research, CIMB Securities and HLIB highlighted accelerating March 2026 loan growth, resilient deposits, stable asset quality and early signs of margin recovery, while warning that Middle East war-driven cost pressures and second-order credit risks could weigh on sentiment over the coming quarters.
RHB Research said system loans grew 5.4% year on year in March 2026, led by a stronger business segment and improved leading indicators, while maintaining its Overweight call with top picks including Public Bank, Maybank, CIMB and AMMB.
The research house noted that business loans rose 5.6% year on year, supported by working capital demand amid higher energy and commodity prices linked to the Middle East conflict.
It added that deposits expanded 4.2% year on year with strong CASA inflows, keeping liquidity comfortable even as loan-to-deposit ratios edged slightly lower. Asset quality stayed stable at a gross impaired loan ratio of 1.40%, while analysts said buffers remain sufficient to absorb near-term volatility.
MBSB Research also maintained a Positive stance on the sector, pointing to a broad-based rebound in loans driven by business borrowing and improving leading indicators after several months of sluggishness. It highlighted stronger fee income prospects and liquidity conditions, supported by rising CASA and steady lending rates, while acknowledging that Middle East-related cost pressures could weigh on growth momentum in later months. The research house maintained that Malaysia’s defensive banking structure and high dividend yields continue to offer support despite macro uncertainty.
CIMB Securities kept its Overweight rating, noting emerging second-order transmission risks from supply chain fragility, higher logistics costs and rising risk transfers that could surface within three to twelve months. It said banks are expected to remain defensive, prioritising asset quality and capital efficiency while maintaining firm dividend visibility, with top picks including RHB, Public Bank and Hong Leong Bank.
Hong Leong Investment Bank also maintained Overweight, citing resilient system fundamentals with strong loan growth, healthy deposit inflows and easing gross impaired loans, while retaining CIMB and AMMB as its preferred names. It noted margin recovery signs from interest spread expansion, though cautioned that geopolitical tensions could still introduce volatility.
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