This report profiles Malaysia’s banking industry, analyzing sector size and performance as well as market trends through 2013. The report also highlights the leading players in the industry including Maybank, CIMB Bank, Public Bank and RHB Bank.

Malaysia’s GDP grew by 5.1% in the fourth quarter of 2013, backed by private sector demand and improvement in exports. The banking industry in Malaysia remained resilient in 2013. Total loans surged 11% year on year to reach MYR 1.23 trillion in 2013. On the other hand, total deposits grew 8% year on year. The overnight policy rate has been maintained at 3% on the back of challenging environment. The pre-tax profit of Malaysian commercial banks increased at a CAGR of 16% for the last 10 years. Both RWCR and core capital ratio of Malaysian banks remained strong as of December 2012. Malaysian banks are striving to achieve the capital requirements prescribed in the Basel III requirements.

Loans for purchase of residential property dominated the portfolios of most banks followed by transport vehicle loans. Rising per capita income and growing urbanization in the country are driving loan growth in these two segments. Fixed deposits and investment deposits continued to dominate total deposits in banks. Net non-performing loan ratio has also shown a successive quarterly decline, thereby showing the strength of the banking system. The banking system in Malaysia has perhaps again entered a period of stability following crises requiring minimal intervention by the central bank.

The outlook for Malaysian banking is positive owing to the stable economic growth and rising per capita income of the country. The emergence of Malaysia as an Islamic banking hub will further elevate the growth of this sector.

Key Points:

• As of December 2013, total assets held by banking institutions in Malaysia amounted to MYR 2.05 trillion. The total assets of banking system increased by 8.5% compared to December 2012.

• Total loans of the banking system grew by 10.6% year on year to reach MYR 1.23tr in 2013.

• Purchase of residential property accounted for 34.8% of the total loans approved by the banking system in 2013.

• The overnight policy rate was raised by Bank Negara Malaysia (BNM) in May 2011 by 25 basis points. Since then it has remained stable at 3%.