Kuala Lumpur (The Star/ANN) - CIMB Equities Research remains Neutral on Malaysia's investment banking sector due to slower loan growth and margin squeeze despite news reports about the sale of HwangDBS Investment Bank (HIB).
It said today the sale of HIB would not change its view as this was part of the continuous consolidation in this segment.
CIMB Research was referring to a news weekly report that Hwang-DBS Malaysia was in the final stage of hiring a foreign investment bank to dispose of its investment banking business.
Another HIB shareholder, DBS would also sell its stake. The interested parties are said to be AMMB Holdings, Affin Holdings and K&N Kenanga.
"However, the acquisition of HIB would dilute EPS by 4 per cent for AMMB and 14 per cent for Affin due to the high level of equity financing. Despite undemanding valuations, we remain Neutral on the sector given weaker loan growth and margins. Maybank remains our top pick," it said.
CIMB Research said the sale of HIB will give the acquirer the opportunity to increase its scale of operations, especially in the equity market. But due to the high percentage of equity financing, acquisition of HIB would be EPS dilutive to the tune of around 4 per cent for AMMB and 14 per cent for Affin.