Maybank closes below RM10 as banking shares retreat
The Bursa Malaysia Financial Services Index hit a 10-month low, while Affin Hwang warned that higher bond yields could affect banks’ income and capital ratios.
Malayan Banking Bhd ended trading on Oct 1 at RM9.95, down 0.4%, as most banking shares weakened amid higher bond yields. It was Maybank’s third consecutive daily decline and its first move below RM10 in nearly nine months.
CIMB Group Holdings Bhd and Hong Leong Bank Bhd both lost over 1%. The Bursa Malaysia Financial Services Index reached a 10-month low; its constituents include insurers and stockbrokers alongside banks.
Affin Hwang Investment Bank said higher yields would put pressure on banks’ non-interest income in the near term and on their capital ratios. Falling bond prices increase paper losses on banks’ holdings, with losses realised if the securities are sold.
The research house also said higher corporate bond yields could influence fundraising decisions by banks and other companies, affecting the fees banks earn.
The US Federal Reserve’s first rate increase in three years pushed the benchmark 10-year Malaysian Government Securities yield as high as 4.18% before it eased. More economists expect Bank Negara Malaysia to increase the overnight policy rate at November’s final scheduled policy review of the year.
Affin Hwang’s analysis identified Maybank and Alliance Bank Malaysia Bhd as having the longest bond duration, a measure of interest-rate sensitivity. Public Bank Bhd and Hong Leong Bank had the shortest. It said Maybank, RHB Bank Bhd and CIMB could face the largest capital-ratio declines, while Public Bank and Hong Leong Bank would experience the smallest.
