This is the latest report from Credit Suisse where it valuates Malaysian banks after the implementation of Malaysian Financial Reporting Standards 9 (MFRS 9).
Take a look at the whole summary of bank’s report card for 2nd quarter of 2017.
We think that banks had rallied and recovered the losses trading fair to what it is now but we still think that you should hold if you have already seen capital gains holding from last year plus dividend payout that were made.
From now on, the movement is likely broad market related and we do not think that the major banking blue chip would outperform the KLCI. But we are still holding it rather than returning to cash as most stock seem fairly valued too.
What’s your take?
The argument for the downgrade refers to the implementation of Malaysian Financial Reporting Standards (MFRS) 9. Somewhat similar to CET1 ratio, the provision methodology would change under MFRS 9.
It was estimated that under MFRS 9, it would negatively impact the net profit of banks in the future.
See the full report below including sensitivity analysis of respective banks.