KUALA LUMPUR, April 22 — CIMB Group Holdings Bhd’s (CIMB) price fell sharply during the FTSE Bursa Malaysia KLCI’s (FBM KLCI) mid-morning session, leading the selling activity among heavyweights.
At 11 am, CIMB shares eased 14 sen or 2.0 per cent to RM6.72, dragging the composite index down by 2.56 points, with 4.61 million shares traded.
On the index board, the Financial Services Index tumbled 172.28 points to 17,836.87.
In a research note today, MIDF Amanah Investment Bank Bhd (MIDF Research) said in light of worsening economic conditions, the banking sector has to contend with various potential headwinds, including weaker loan growth, poorer non-interest income (NOII) outlook, higher provisioning costs, and possible net interest margin (NIM) compression.
“At the current juncture, we do not see any convincing tailwinds to the bottom line,” it said.
Regarding NIMs, MIDF Research thinks the likelihood of an overnight policy rate cut is slim but sees the danger in possible overseas interest rate cuts, which could affect some of the large-to-mid-sized banks.
“We are also wary of possible further loan yield compression on a local front – the heavy take-up of business loans originally aimed to combat falling loan yields.
“Regardless, the liquidity situation has become better, with there being less incentive to compete for loans,” it added.
Meanwhile, MIDF Research said the NOII outlook is skewed towards the negative.
“Weaker economic and market conditions bode poorly for the fee income, especially when several banks were gunning for their investment banking franchise to capitalise on the 2025 forecast’s much brighter initial outlook.
“Non-fee income should see strong forex gains – investment income performance is less predictable,” it said.
Meanwhile, media reports indicate that tensions between United States President Donald Trump and Federal Reserve (Fed) chair Jerome Powell have fuelled investor concern amid a worsening trade war.
— Bernama
