KUALA LUMPUR, June 11 — Banks recorded continued loan growth in the first quarter of 2024 despite relatively higher borrowing costs with margins growing quarter to quarter and non-interest income (NOII) seeing “robust” growth, Maybank IB said in a note today.

“Expense growth was however faster than expected in several instances while credit cost was higher year-on-year,” Maybank IB banking sector senior analyst, Desmong Ch’ng, wrote.

“All in, however, now expect faster 2024E (estimated) net profit growth of 6.8 per cent (from 5.5 per cent previously) and 2025E (estimated) earnings growth of 6.1 per cent.”

Benchmark interest rates have returned to pre-pandemic levels and Bank Negara Malaysia is expected to keep the rate at 3.0 per cent throughout the year, according to economists polled by Reuters, citing inflation data and expectation that the dollar will remain strong with the US Federal Reserve not expected to cut interest rates anytime soon.

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Most banks reported higher earnings last year in the absence of a one-off prosperity tax imposed in 2022 but some analysts believe many are still struggling to reverse the decline in net interest margin (NIM).

All 10 public-listed banks in Malaysia recorded a year-on-year drop in NIM in the October-December quarter. On a quarter-on-quarter basis, only Hong Leong Bank Bhd managed to buck the trend, with its NIM growing by a marginal basis point to 1.85 per cent, business paper The Edge reported in March.

NIM is seen as a key measure of profitability by looking at how much a bank earns in interest on loans against what it pays out to depositors.

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