KUALA LUMPUR, Malaysia's banking industry is poised to continue charting a bright future, thanks to the conducive business environment provided by the government.The World Bank's upward revision of its growth forecast for the country's gross domestic ...


KUALA LUMPUR, Malaysia’s banking industry is poised to continue charting a bright future, thanks to the conducive business environment provided by the government.

The World Bank’s upward revision of its growth forecast for the country’s gross domestic product (GDP) in 2018 to 5.4 per cent from 5.2 per cent previously due to the continued strength in private consumption, was a supportive factor to be reckoned with.

The anticipated decline in public investment, it said, would see gross fixed capital formation be driven mainly by expansion of private sector capital expenditure, to be sustained by the continued flow of infrastructure projects alongside capital investments in the manufacturing and services sectors.

The improved economic outlook has, no doubt, injected confidence into the market, resulting in a stable loan growth outlook for the banking industry this year.

For instance, Malaysia’s largest bank by assets, Malayan Banking Bhd (Maybank), has maintained its loan growth target at four per cent in the current financial year (FY18), driven mainly by corporate demand and stable consumer lending.

CIMB Group Holdings Bhd, the second largest banking group in the country, expects loan growth to increase six per cent in FY18 mainly contributed by the upward momentum in the country, while RHB Bank Bhd aims to register a six per cent increase, driven by mortgage as well as small and medium enterprise (SME) loans.

The overall banking industry is anticipated to record a four to five per cent loan growth for 2018, thanks to the initiatives by the government, particularly a spate of holistic programmes outlined under the 2018 Budget.

The “Mother of all Budgets” tabled by Prime Minister Najib Tun Razak last October, ranged in measures that continued to be concerned about the welfare and well-being of the bottom 40 per cent income group, to financing schemes and export-related projects that could assist startups and SMEs.

Also included were a series of infrastructure ventures for the people or ‘infra-rakyat’ projects such as the East Coast Rail Link (ECRL) Project and High-Speed Rail Project connecting Kuala Lumpur and Singapore.

The budget also, for the first time, gave emphasis to the Industrial Revolution 4.0 and hence, introduced more digital initiatives aimed not only at assisting businesses and investments to stay competitive, but also cater to the needs of technology-savvy youths.

Prior to this, the government placed emphasis on digital connectivity under the 2017 Budget to strengthen the country’s digital economy and the move has propelled the banking industry too.

For instance, Maybank, being the first bank to launch an online banking platform in Malaysia in 2000, said in its annual report for FY17 that it had secured 11 million Maybank2U (M2U) registered online users, with 4.33 billion transactions made in 2017.

Its mobile transactions registered a 146 per cent year-on-year growth to 1.2 billion.

Similarly, in its FY17 annual report, CIMB\’s FY17 stated the number of digital banking customers increased by 22 per cent y-o-y, with more than 150 million digital transactions for the year.

“Additionally, we had an 18 per cent increase in digital customers active on the CIMB Clicks online banking portal and a 34.8 per cent increase in active customers using CIMB Clicks mobile application,” it said.

As for RHB, it kick-started the Digital Transformation journey in April 2017 and introduced online platforms, namely RHB Smart Account and RHB Smart Account-i.

It also introduced the online mortgage application platform, RHB MyHome app, for which the bank expects 80 per cent of mortgage applications to be submitted via it by 2022.

Overall, the three banks agree that competition from digital entrants, especially the new financial technologies (FinTechs), is expected to intensify in the coming years, and focus will continue to be on enhancing their digital initiatives.

Source: NAM News Network

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