Minimal need for banks to capitalise, UOB Kay Hian Research says

Public Bank exhibits the lowest potential downside to our assessed trough (30% vs sector’s -44%), given its low GIL base and hence provision sensitivity. Its share price has also declined more than the sector’s.

KUALA LUMPUR: The local banking sector’s common equity tier one (CET1) is expected to remain above the minimum requirement, placing minimal risk on the need to recapitalise, UOB Kay Hian Malaysia Research says.

In its report issued on Tuesday after performing a stress test on the sector, it said that its current base-case target prices imply sector price-to-book (P/B) of 0.95 times, which (similar to the Global Financial Crisis or GFC trough).