Malaysian banks are benefiting from a supportive home market that will provide growth opportunities in the next year and a half, says Fitch Ratings.
Malaysia’s gross domestic product should grow by between 4% and 5% in 2023–2024 to support credit demand. Meanwhile, asset quality performance will be supported by a healthy job market, says Fitch. Household sector loans account for nearly 60% of total lending in the country.
For households, outstanding loans expanded by 5.1%, mainly driven by loans for the purchase of residential properties and cars, says the central bank. The growth in credit to the private non-financial sector moderated to 3.8% (Q1 2023: 4.1%) on account of slower growth in outstanding business loans.
Malaysia’s monetary policy tightening has been measured, which has resulted in a controlled increase in the debt-service burdens of borrowers.
The Malaysian economy expanded by 2.9% in the second quarter this year, compared with a 5.6% growth of the previous quarter. The country faced slower external demand while domestic demand remained the key driver of growth, supported by private consumption and investment, says the country’s central bank, Bank Negara Malaysia.
At the end of 2022, the major banks in the country had increased their net interest income in the past few years, surpassing 2019 levels.
Malayan Banking Berhad reported $4.82bn in net interest income in 2022 while CIMB Group reached $3.54bn.
