In Focus
RETAIL BANKING | Tony Chua, Malaysia

Malaysian banks to focus on non-interest income

Non-interest income business for the country's eight anchor banks seen to be about $5.91bn this year .

Analysts expect banks' non-interest income to jump significantly to between RM15bil ($5.07 billion) and RM20bil ($6.75 billion) next year amid compression in net interest margins (NIM) in the banking industry.

NIM is a measure of the difference between the interest income generated by banks and the amount of interest paid out to depositors.

Many analysts anticipate NIMs to remain compressed due to intense competition among banks for mortgage loans and deposits despite being in an interest rate upcycle environment.

An analyst with a foreign bank-backed brokerage said she expected non-interest income business for the country's eight anchor banks, excluding Islamic banks, this year to be about RM17.5bil ($5.91 billion) compared with RM3.1bil ($1.04 billion) in the first quarter. For next year, she anticipated the figure to rise to RM20bil ($6.76 billion).

She attributed this to greater focus on foreign exchange, wealth management, bancassurance and capital market activities which would enlarge fee-based income and enhance the non-interest income of banks. Generally, banks derive income from interest and non-interest income.

View the full story in The Malaysian Star.

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