Malaysia Banking Industry Report - 2015

Malaysia Banking Industry Report - 2015

  • August 2015 •
  • 33 pages •
  • Report ID: 3307083 •
  • Format: PDF
This report profiles Malaysia's banking industry, analyzing sector size and performance as well as market trends through 2014 and outlook for 2015. The report also highlights the leading players in the industry including Maybank, CIMB Bank, Public Bank and RHB Bank.

Malaysia's GDP grew by 4.9% y/y in the second quarter of fiscal year 2015. The growth was mainly supported by private sector demand in an environment of weak exports. The banking industry in Malaysia remained resilient in 2014. Total loans grew to MYR 1.34tr, while total deposits from customers increased to MYR 1.64tr in 2014. The loan-to-deposit ratio was healthy at above 85%. The biggest portion of the gross loans was utilized for working capital with 35%, followed by residential property and transport vehicles with 18% and 13%, respectively. Both RWCR and core capital ratio of Malaysian banks remained strong as of December 2014. Malaysian banks are striving to achieve the capital requirements prescribed in the Basel III requirements.

Loans for purchase of residential property dominated the portfolios of most banks, followed by transport vehicle loans. Rising per capita income and growing urbanization in the country are driving loan growth in these two segments. Despite a contraction in 2014, fixed deposits continued to dominate total deposits in banks. Net non-performing loan ratio has also shown a successive quarterly decline, thereby showing the strength of the banking system.

The outlook for Malaysian banking is positive owing to the stable economic growth and rising per capita income of the country. However, loan growth for this year is expected to moderate, largely due to falling household loans growth as well as weak consumer sentiment. Nevertheless, the emergence of Malaysia as an Islamic banking hub will further elevate the growth of this sector.

Key Points:

o As of December 2014, total assets held by banking institutions in Malaysia amounted to MYR 2.26 trillion (tr), an increase of 9.5% y/y as compared to 8.5% in 2013.

o Total loans of the banking system grew by 9.3% y/y to reach MYR 1.34tr in 2014.

o Total deposits of the banking system grew by 7.6% y/y to reach MYR 1.64tr as of Dec 2014.

o Purchase of residential property accounted for a significant 40% of the total loans approved by the banking system in 2014.