KUALA LUMPUR (Sept 13): CIMB Research expects a strong recovery from the banking sector in the third quarter of 2016 (3Q16) after a poor 2Q16, due to a decline in loan loss provisioning (LLP). Lower Maybank’s LLP would more than offset the negative impact from the rate cuts in 3Q16,” wrote CIMB Research in a Sep 9 note. “As such, we forecast a 4.2% drop in banks’ LLP in 2017, which would fuel recovery in 2017 net profit growth to 14.5%,” said CIMB Research. In fact, yoy growth in 2Q16 NII was better than in 1Q-2Q15, when loan growth was stronger at around 9% yoy, but offset by the banks’ larger margin erosion,” said CIMB Research. “As such, we think the industry’s GIL ratio would not be significantly higher than our projection of 1.8% for end-2016,” said CIMB Research.

Source: The Edge Markets September 13, 2016 02:48 UTC