Moody's Ratings affirms RHB Bank's A3 ratings; outlook stable

Moody's Ratings affirms RHB Bank's A3 ratings; outlook stable

Malaysia's RHB Bank has maintained its investment-grade status, with Moody's reaffirming its A3 sovereign credit rating. The rating agency, in its latest assessment, highlighted the country's stable and investable economic environment, which has been bolstered by robust financial policies and regulatory frameworks. This affirmation comes at a time when Malaysia's financial sector is experiencing mixed signals, with some banks reporting positive earnings while others face headwinds.

The FBM KLCI's erratic performance, closing below the 1,575 level, has been attributed to foreign selling pressure, dampening hopes for a Chinese New Year rally. However, the reaffirmation of Malaysia's A3 rating by Moody's underscores the country's resilience and stability in the global financial landscape. The index is expected to trade within the 1,570-1,580 range today [1].

Technical analysts have also noted key resistance and support levels for the FBM KLCI. The resistance levels are set at RM3.15 (R1) and RM3.26 (R2), while the support levels are at RM3.00 (S1) and RM2.87 (S2) [1].

RHB Bank's stable outlook is a positive sign for the Malaysian banking sector, which has been grappling with various challenges, including tariff risks and bad debts. The bank's ability to navigate these challenges and maintain a stable financial position has been instrumental in its continued success. The recent earnings reports from Malaysian banks, such as Affin Bank, have shown mixed results, with some banks reporting strong earnings while others face challenges in managing their loan portfolios.

The banking sector's earnings growth is expected to grow at a compound annual growth rate (CAGR) of 3.4% from 2024 to 2026, according to HLIB's projections [2]. This growth is expected to be driven by a combination of factors, including robust economic conditions, increased consumer spending, and a steady increase in corporate lending.

In conclusion, Moody's reaffirmation of RHB Bank's A3 rating is a positive development for the Malaysian financial sector. The stable outlook reflects the country's strong economic fundamentals and regulatory environment, which have been instrumental in supporting the growth and stability of the banking sector. As the sector continues to navigate various challenges, the stable rating provides investors with a level of confidence in the country's financial stability.

References:
[1] https://businessnews.com.my/moodys-malaysia-a3-sovereign-credit/
[2] https://klse.i3investor.com/web/stock/news-blogs/5185