Workers fund shows faith in Malay banks

The Employees Provident Fund has raised its stake in local banking stocks Alliance Financial Group Bhd, AMMB Holdings Bhd, Bumiputra-Commerce Holdings Bhd (BCHB), EON Capital Bhd, Malayan Banking Bhd, Public Bank Bhd and RHB Capital Bhd.

According to latest filings to Bursa Securities, EPF raised its stake in Bumiputra-Commerce Holdings Bhd to 17.3 percent in the middle of April from 16.2 percent at the end of last year and to 8.5 percent comprising 605.6 million shares in Maybank from 579.6 million during the same period.

Not surprisingly, EPF also upped its stake in Public Bank, which has one of the lowest non-performing loans ratio in the industry. From December to the middle of this month, the provident fund increased its shareholding in Public Bank to 14.7 percent from 14.2 percent.

In the same period, the EPF also upped its stake in Alliance Financial Group Bhd to 13.6 percent from 11.6 percent at the end of 2008, to 15.9 percent in AMMB Holdings from 13.5 percent in 2008, and to 57.5 percent in RHB Capital from 57.3 percent in 2008. EPF also upped its direct interest in EON Capital to 10.7 percent this month from 10.4 percent as at end-2008.

With the anticipation of rising NPLs, fund managers still believes Malaysian banks are better off than their foreign counterparts.

"Our banks are in a better position compared to foreign banks as they are not exposed to toxic assets like subprime loans," said Kumpulan Sentiasa Cermelang Sdn Bhd’s director of research and fund manager Choong Khuat Hock.

But Choong also believes that the worse is not over yet. "NPL is a lagging indicator. Weaker external factors like weaker exports are affecting our economy and as it slows down, it will affect NPLs and the banks."