Maybank and CIMB have significant regional franchises and the strongest domestic institutional and investment banking franchises. These had propped up the banks’ market-related incomes in recent years and helped to offset margin pressures when the funding environment tightened, according to Fitch. The banks also have close state linkages, with government-linked shareholders holding a majority of shares in aggregate through various investment vehicles. Such ties have helped them to reliably access capital in the past to fund growth and maintain capital ratios, the Fitch report points out.
Fitch Ratings expects the credit profiles of the six largest Malaysian banks to remain steady despite mounting external risks from global trade tensions. Its assessment takes into consideration Malaysia’s diversified economy, banks’ adequate loan-loss buffers and consistent underwriting standards that should continue to keep impairment risks relatively manageable.
”We expect the household sector, which makes up close to 60% of system loans, to stay resilient due to steady job conditions and debt servicing capacity. This is notwithstanding the sector’s high, albeit stable, leverage. The SME sector, which has been a growth driver for many banks, may be more vulnerable to a softer economic outlook from a higher trade tariff environment, but we do not expect impairment rates to rise significantly and affect banks’ overall financial performance,” Fitch says.
