Aug Bank Stats ' Still Improving

'''' Loans growth accelerated mainly due to business while household was maintained.''

'''' Application lower but approval higher mom, both still near record levels.'' Approval rate jumped to 57% from <50%.''

'''' Leading indicators still supports sustain loans growth.'' Maintain 2011 loans growth projection of 12%.''

'''' LD ratio increased slight but still has excess of RM251bn.

'''' Lending rate improved, provides temporary respite but pressure on NIM would continue.'' Important for continued loans growth to mitigate the impact.''

'''' Overall asset quality improved but deteriorations in some purposes.'' Not overly concerned unless prolonged''

'''' Capital ratios remained robust.

'''' Sector healthy and can weather the potential storm ahead on the back of rising domestic consumerism and ETP.

'''' Maintain Overweight, top picks in order of preference are Maybank, AFG, AMMB, CIMB and RHB Cap.''

'''' With heightened earnings risk and share prices volatilities, will be reviewing our earnings projections and target prices with downward bias (to be conservative), albeit marginally.

''

MAS (SELL)

MAS to be Revamped

'''' MAS has revamped its organization structures, where CEO Jauhari will focus on long-haul, while deputy CEO Rahsdan on short-haul operations.

'''' The new structure will have 5 pillars i.e. 1) wide-body operations; 2) narrow-body operations; 3) finance and commercial; 4) human capital and support functions, and; 5) key operating subsidiaries.

'''' Existing head of units have been retained, for their experiences and maintaining the existing orders.

'''' The revamp of MAS operations seemed to be done in swift manner tacking the key focus areas.

'''' However, we remained concern on the success of the implementation, given:

'''' heightened risk of global slowdown (affecting premium demand);

'''' competitive pressure from existing and new FSC;

'''' growing competition from existing and new LCC;

'''' strong objections from stakeholders i.e. MAS Union etc.

'''' Maintain SELL on MAS with unchanged target price of RM1.19.

''

Highlights of BNM Statistics (Aug 2011)

'''' M1 growth softened slightly to 13.7% yoy (Jul: +14.5% yoy) while M3 grew at an easier pace of 10.2% yoy (Jul: +11.3% yoy) amid marginal increase in BNM reserves.

'''' The double-digit money supply expansion suggests domestic economic activities have remained largely stable in 3Q. We maintain our view that GDP growth will pick up modestly to 5.3% in 2H, averaging 4.8% for full year 2011.

'''' Given that risks to growth have increased while inflation appeared to have peaked in June, we see BNM holding the OPR steady until end-2011.

'''' Recent capital outflows as evidenced by weakening of MYR amid foreign selldown should have drained some liquidity from the local system. This should help to ease the excess liquidity and contain inflation and asset bubble.

''

FBM KLCI: Volatility Post Window Dressing

'''' With the plunge in Dow last Friday, positive PMI from China (last Saturday) as well as post window dressing, the market is likely to remain volatile.

'''' Technically, despite filling the 1377-87 gaps, formation of a star signals that investors are indecisive with downward bias given that the FBM KLCI failed to penetrate the psychological 1400 resistant level.'' Immediate resistance levels are 1400, 1423 (mid Bollinger band) and 1443 (30-d SAM). Supports are situated near 1364 (5-d SMA), 1341 (lower Bollinger band) and 1310 (26 Sep pivot low).

''

Dow: Building its base

'''' Despite the volatility, the Dow is looking like forming a base and consolidating sideways within a box.''

'''' Immediate resistance levels are the psychological 11k and 11,160 (upper Bollinger band) while support levels are at 10739 (Mid Bollinger Band) and 10581 (lower Bollinger Band).