Malaysian banks' core net profit forecast to grow 5.8% in 2018

Earnings growth could taper off next year.

For 2018, Maybank Kim Eng's Economics Team has raised Malaysia’s real GDP growth forecast to 5.3% from 5.1% previously.

However, the analysts lowered their aggregate operating profit growth forecast for Malaysian banks to 5.4% from 5.9%, primarily on slower loan growth assumptions, while core net profit growth forecast is lowered to 5.8% from 7.1% previously.

"A key contributor to earnings growth in 2017 has been the expansion in NIM, for which we project to be stable in 2018, which is one of the key reasons why we expect earnings growth to taper off next year. While we expect some positive flow through from an expected 25bp hike in interest rates in 2018, the overall impact is expected to be marginal," added Maybank Kim Eng.