Financial Industry 08 (Aug 23 - Dec 26)

[winston]

Malaysia Banks: Upward reversal of LLP from the bottom

We are projecting 3-4% yoy core net profit growth for banks in 2Q25F, underpinned by growth of 2-3% yoy in NII and c.6% in NOII.

We are not overly concerned about the potential qoq upturn in LLP in 2Q25F as the 2Q25F credit charge-off rate is likely to remain low at c.15bp.

Reiterate Overweight on banks given our expectations of ongoing writebacks in management overlay and rising dividend payout ratios.

Source: CGS

https://rfs.cgsi.com/api/download?file= ... 4DA28AF7A8

[behappyalways]

Top 10 global banks by total assets
https://x.com/Mayhem4Markets/status/1945458739919597998

[winston]

Malaysian banks’ bad debts could rise from tariff risks, CGS International flags

Bad debts at Malaysian banks could rise this year and in 2026, from potential credit risks amid higher US tariffs.

Gross impaired loans — debts deemed unrecoverable as a percentage of total loans — could rise by 5.6% in 2025, before picking up to 7% in 2026. That’s a reversal from the decline in bad debts over the past four years.

A 10% jump in gross impaired loans for 2026 will reduce the year’s total net profit of banks under coverage by 3.2%.

Hong Leong Bank Bhd (KL:HLBBANK) would be least impacted with its net profit down only 1%, while Affin Bank Bhd (KL:AFFIN) would be heaviest hit with a potential earnings decline of 10.9%.

In the event that banks need to provide for 50% of the new gross impaired loans, the additional provisions will be able to cover up to 37.9% of the increase in 2026.

Source: theedgemalaysia.com

https://theedgemalaysia.com/node/763831

[behappyalways]

How ‘Buy Now, Pay Later’ Makes Billions From ‘Free’ Loans | WSJ The Economics Of
https://m.youtube.com/watch?v=3yC8WDjCIAU

[winston]

Malaysian banks will withstand tariff risks even as provisions may rise — Fitch

By Maryam Kamal

“Assuming no further escalation, we do not expect the higher tariff to have an outsized impact on banking-sector performance because of banks’ consistent underwriting practices and adequate loan-loss buffers”.

Still, the persistent uncertainty due to rapidly evolving trade policies is likely to dampen loan demand and put moderate pressure on asset quality, they cautioned.

We believe pressure on net interest margins may re-emerge”, though the impact on banks’ profits is expected to be “broadly manageable due to their active asset-liability management”.

While asset quality of major Malaysian banks has been stable since last year and management overlays built up have been gradually released, credit impairments are expected to rise moderately over the next 12 to 18 months as some banks rebuild their loan-loss buffers.

Source: theedgemalaysia.com

https://theedgemalaysia.com/node/766374

[winston]

China's banks see both declines in NPL balance and ratio

China's commercial banks‘ non-performing loans declined by 2.4 billion yuan (HK$2.62 trillion) quarter-on-quarter to 3.4 trillion yuan as of June-end and the NPL ratio improved 0.02 percentage points to 1.49 percent, official data shows.

The banks posted a combined net profit of 1.2 trillion yuan in the first half of the year.

The sector's net interest margin narrowed slightly to 1.42 percent in the second quarter, down 1 basis point from the previous quarter.

Banks increased their provisions against potential loan losses, with loan loss reserves rising by 126.9 billion yuan from the previous quarter to 7.3 trillion yuan.

The provision coverage ratio strengthened by 3.84 percentage points to 211.97 percent.

Source: The Standard

https://www.thestandard.com.hk/market/article/309075/

[winston]

<Research>M Stanley Lists Ratings, Dividend Yield Forecasts for CN Banks for 2025, 2026 (Table)

Stocks | Ratings | 2025 Dividend Yield Forecast | 2026 Dividend Yield Forecast
ABC (01288.HK) | Overweight | 5.1% | 5.3%
ICBC (01398.HK) | Overweight | 6.1% | 6.2%
CCB (00939.HK) | Overweight | 5.7% | 5.9%
BANK OF CHINA (03988.HK) | Overweight | 5.7% | 5.9%
BANKCOMM (03328.HK) | Underweight | 5.6% | 5.3%
PSBC (01658.HK) | Overweight | 4.8% | 4.6%
CM BANK (03968.HK) | Overweight | 4.0% | 4.2%
CITIC BANK (00998.HK) | Overweight | 5.8% | 6.1%
MINSHENG BANK (01988.HK) | Overweight | 5.0% | 5.5%
CEB BANK (06818.HK) | Underweight | 6.4% | 6.6%
CQRC BANK (03618.HK) | Underweight | 7.4% | 7.5%

Source: AASTOCKS Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

[behappyalways]

How Stablecoins Could Help Small Businesses Slash Credit Card Fees
https://m.youtube.com/watch?v=s5u7uf0L-L8

[winston]

China Banks

Addressing more stablecoin questions

We think cross-border payments will be a key policymaker consideration in HK stablecoin issuer licences, with large HK banks well-placed to benefit.

While we see minimal near-to-medium term earnings impact for traditional banks from increased stablecoin usage, the long-term impact is uncertain.

Numerous challenges may need to be overcome before we think stablecoin can be widely used for cross-border payments.

We reiterate sector Overweight, with tailwinds from improving operating trends. Top picks remain CMB, CCB, ICBC and CQRCB.

Source: CGS

https://rfs.cgsi.com/api/download?file= ... 91bd6c492f

[winston]

<Research>G Sachs: Risk-Reward for CN Insurers to Improve; 3Q Earnings May Beat Forecasts

Chinese insurers have underperformed since the end of July, with H-/ A-shares declining by an average of 2%/ 6% each, while the HSI and the CSI 300 Index rallied by 8% and 14% during the same period, according to Goldman Sachs' research report.

This is believed to be due to the high valuation levels following the rebound in stock prices since early April and the weak earnings growth outlook caused by the high base effect in 2H24.

Related News: BofAS Expects CN Insurers' 1-3Q Results to Beat, Raises 2026/ 2027 Profit Forecasts for PICC GROUP/ PICC P&C

Looking ahead to the upcoming 3Q25 results, Goldman Sachs believed that the risk-reward for Chinese insurers is improving and anticipated that 3Q25 earnings may beat expectations driven by equity investment gains.

The new business value for 2026 may see double-digit growth, while the contractual service profit margin is expected to reach a turning point.

Among Chinese insurers, Goldman Sachs expected CHINA LIFE (02628.HK) to benefit the most from changes in the stock market and yields in 3Q25, followed by CHINA TAIPING (00966.HK).

NCI (01336.HK)may exhibit the strongest earnings growth although its book value and solvency ratio may lag behind peers.

The broker also upgraded CPIC (02601.HK) from Neutral to Buy, and CHINA TAIPING from Sell to Neutral.

Related News: M Stanley: USD4.6B Foreign Capital Poured into CN stocks in Sep; Foreign Long-Only Funds Attract USD6B Inflows YTD

Source: AASTOCKS Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN