KUALA LUMPUR, April 21 — Malaysian banks will see better conditions this year due to expected improved economic growth, BMI Research said today.
The Fitch Group unit also said it expects Malaysia’s Gross Domestic Product (GDP) to come in at 4.7 per cent growth, compared to 4.2 per cent last year.
“We expect the outlook for Malaysian banks to recover over the course of 2017, in tandem with the improvement in the economic growth outlook, following challenging conditions over the past two years due to domestic and external headwinds such as political uncertainty and the collapse in commodity prices,” BMI Research said.
Overall loan growth is also expected to increase to 6.5 per cent in 2017, compared to only 5.3 per cent in 2016.
“The Malaysian banking system is relatively well-capitalised, with Tier 1 capital ratio standing at 14 per cent in February, which will enable it to weather any unexpected economic shocks,” it said further.
The note was released along with the outlook of banks in four other South-east Asian neighbours.
While banks in Indonesia, Philippines and Thailand also have a positive outlook, banks in Singapore are expected to continue to face challenges, BMI said.
“Singapore banks still face multiple headwinds from subdued economic activity and exposures to the oil and gas sector,” it added.