Financial news: S&P Global comments on Malaysian banks amidst tougher conditions in 2023
SVP Bank versus Malaysian banks? Kidding, right?
A friend asked me what will happen to Malaysian bank if even the 16th largest bank in the US, SVP Bank could collapse. I smiled and said that it’s best to look at them separately. There are many reasons why SVP Bank collapsed. The reasons are not present with Malaysian banks. Read here for the earlier article: Moody’s downgraded the US banking system outlook I shall not comment further about Malaysian banks. We look at the comments by S&P Global instead.
Full article here: focusmalaysia.my In a chart-book style report by S&P Global Ratings entitled “Malaysian Banks Outlook 2023: Prepared for Tougher Conditions” it provided all the below numbers.
“Higher funding costs will drag on credit demand in Malaysia.”
“Credit growth could slow to 4%-5% from 6% in 2022.”
Very broadly, the international rating agency expects Malaysia’s economy to expand by 3.2% in 2023 which is a “large comedown” from the strong post-pandemic recovery of 8.7% in 2022.
Net interest margins of Malaysian banks are also likely to decline by five to 10 basis points (bps) as term deposit rates continue to increase in step with policy rates.
Stable employment conditions and adequate household financial assets to be mitigating factors against high household debt.
“We see limited contagion effects from recent troubles at US regional banks and Credit Suisse.”
“Healthy capitalisation and stable retail deposit bases are key credit strengths for Malaysian banks.” Do read the full article here: focusmalaysia.my
Not all are rosy, but it’s definitely not gloomy
GDP growth for 2023 is likely to slow. That’s not so positive. However, it’s a positive number from such a strong 2022 yeah. It says that there are no contagion effects from the recent troubles at US regional banks and Credit Suisse. It says that employment is stable and this is likely to mitigate effects from high household debt. Last but not least is that the banks are all having healthy capitalisation and also stable retail deposits. All these answered my friend’s question with actual analysis and numbers. I do hope my friend would read this article in full.
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