Malaysian banks to see stable profit despite margin and deposit pressures

The banks' established deposit franchises should mitigate competition pressure.

Malaysia’s six largest banks should see stable profits despite facing some margin pressure and deposit competition, said Fitch Ratings.

The country’s economic growth is likely to moderate in 2026, but resilient domestic demand and stable inflation should provide a boon for banks, the credit rating agency said in a report.

Stage 2 loans are improving, and credit costs remain below historical averages, the report added.

The banks’ established deposit franchises and active balance sheet management should mitigate margin pressure and deposit competition, Fitch said.

“Malaysian banks' ratings remain supported by adequate capital buffers, although significant weakening in risk profiles, asset quality or capitalisation could lead to negative rating pressure,” Fitch said.

Bank loans continued to rise in May on record business loan growth, central bank data showed. Gross impaired loans also rose during the same period.