In a statement, the research firm said banking sector price-earnings ratios (PERs) on a one-year forward rolling basis are currently hovering close to pandemic valuation levels, which it believed is unjustified.

“Banking stocks in our coverage currently trade at an average PER valuation of just 9.3 times, which is close to the pandemic trough PER of 8.3 times in October 2020.

“Average valuations are even lower than the long-term – one standard deviation (1SD) to mean PER of 10.1 times,” said Maybank IB.

It said the sector’s return on equity is also expected to average 10% amid earnings growth of 5.8%/6.5% in 2024/2025E and dividend yields averaging about 5%.

“We remain positive on the sector with ‘buy’ calls on AMMB Holdings Bhd, CIMB Group Holdings Bhd, Public Bank Bhd, Alliance Bank Malaysia Bhd, Hong Leong Bank Bhd, and Hong Leong Financial Group Bhd,” said Maybank IB.