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.
Overseas loans make up about 36% to 39% of total lending, providing diversification benefits and reinforcing their franchise values in cross-border banking services.
The asset-quality performance of major Malaysian banks has been stable since last year, supported by the resilient economy and job conditions. “We expect loan-quality metrics to remain broadly steady in the near term. Credit costs have trended lower over the past few years as banks gradually released management overlays built up during the 2020-2021 period, but we expect credit impairments to rise moderately over the next 12-18 months as some banks rebuild their loan-loss buffers in the face of rising economic headwinds,” adds Fitch.
