Moody’s sees Malaysian banks continuing solid performance in 2018

KUALA LUMPUR (Bernama) – Moody’s Investors Service says its six rated Malaysian banks showed solid performance in 2017, with additional improvements likely in some areas in 2018.

Moody’s Vice President and Senior Analyst, Simon Chen, said the asset quality and profitability of the six banks generally improved in 2017, while capitalisation and funding remained adequate.

“We expect loan demand to recover further in 2018, strengthening profitability, but also tightening funding conditions.

“As a result, profit growth among banks with weaker deposit franchises could be limited by higher funding costs,” he said in a statement today on its report titled, ‘Banks – Malaysia: 2017 Sees Asset Quality Stabilise, Profits Improve’.

The six banks in the report are, Malayan Banking Bhd (A3/A3 stable, a3),CIMB Group Holdings Bhd (Baa1 stable), Public Bank Bhd (A3 stable, a3), RHB Bank Bhd (A3/A3 stable, baa3), Hong Leong Bank Bhd (A3 stable, baa1) and AmBank (M) Bhd (Baa1/Baa1 stable, baa3).

It said asset quality would benefit from stronger macroeconomic conditions in 2018, both domestically and regionally.

“Banks with exposure to the oil and gas sector should see their asset quality stabilise on stronger oil prices,” the credit rating firm said.

The report found most banks posted improved profitability in 2017, driven by steady revenue growth, stable net interest margins and a moderation in credit costs.