131 views
Photo from Pixabay via Pexels.

Malaysian banks’ asset quality strong but profits to stay flat in 2024

A sustained currency depreciation may affect import-reliant sectors, an analyst warned.

Malaysian banks’ asset qualities are strong, and stable economic conditions in the country should support credit command, says S&P Global Ratings credit analyst Nikita Anand.

An increase in corporate demand, led by key infrastructure projects, may help push credit growth to 6% in 2024 from 5% in 2023, Anand noted in a report.

Retail credit growth is also likely to stay robust.

"Funding conditions should stabilise as fixed deposit rates appear to have peaked,” Anand said.

ALSO READ: Malaysia warns against four unauthorised companies

However, Anand sees limited upside profitability for Malaysian banks, and return on assets is expected to remain flat at 1.2% in 2024.

Net interest margins may decline further amidst intense competition in the country’s saturated banking sector, Anand warned.

She added the possibility of a modest deterioration in asset quality coming from restructured loans of low-income households and small businesses.

“Sustained currency depreciation could affect import-reliant sectors such as manufacturing, construction, and agriculture,” she further warned.

ALSO READ: Malaysian banks’ loan ratio at 1.6% in Feb

Overall, Malaysian banks’ asset quality should stay stronger than regional peers both in terms of credit losses and nonperforming loans, Anand said, thanks to stable economic conditions.

“Strong labor market conditions and proactive write-off policy should continue to help banks maintain low nonperforming loans ratios. Malaysian banks' stable capitalization also provides an ample loss-absorption buffer,” she said.

Follow the link for more news on

Join Asian Banking & Finance community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!