PETALING JAYA: Market tailwinds within the banking sector, including persistent loan growth and gross domestic product (GDP) expansion, alongside better margin retention, will likely continue to outbalance industry headwinds.
Despite inflationary pressures and a weaker ringgit, Kenanga Research said in a report that the banking sector is anticipated to face fewer resilience tests.
“The sector should be of interest with dividend yields still appearing attractive (6% to 7%) on most names on top of lower embedded sector volatility as compared to other industries,” it said.
Kenanga Research highlighted the “meaningful” movements in banking stock prices, particularly driven by increased foreign investor interest in accumulating shares of sector heavyweights.
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