Malaysia’s banks are gradually rebounding, following a few difficult years with plummeting oil prices and a poorly performing currency. Joy Macknight reports.
The 1Malaysia Development Berhad (1MDB) embezzlement and money laundering scandal, which engulfed two Goldman Sachs bankers, has pushed the south-east Asian country into the limelight for all the wrong reasons. In fact, the Malaysia has been advancing on many fronts in the past few years.
For example, gross domestic product grew by an impressive 5.8% in 2017, “fuelled by strengthening domestic demand, improved labour market conditions and wage growth, as well as improved external demand for Malaysia’s manufactured products and commodity exports”, according to the World Bank. It is expected to grow by 4.9% in 2018, which is slower than previously expected but still robust.
In addition, the country’s top banks continue to rebuild their balance sheets, after reaching their highest levels in 2014. The next two years were difficult, on the back of the global oil price plunge and the ringgit becoming one of Asia’s worst performing currencies. Malaysia’s top two banks, Maybank and CIMB Group (measured by total assets at the end of 2017), have both surpassed their 2014 peaks, while Public Bank, RHB Bank and Hong Leong Bank, rounding out the top five, are within reach of doing so.
In terms of profitability, Malaysian banks’ return on capital kept pace with China’s in 2017 and was above the regional average in Asia-Pacific (excluding China and Japan).
All data sourced from www.thebankerdatabase.com
