Malaysian banks' earnings rose 7% in Q4

Lumpy recoveries of Maybank, AmBank, and Hong Leong Bank boosted the sector’s earnings.

Malaysian banks are on track growth as core earnings inched up 7% YoY and 4% QoQ in Q4 on the back of lower provisions, UOB Kay Hian noted in a report. The sector’s performance was largely driven by the lumpy recoveries of Maybank, AmBank, and Hong Leong Bank.

However, the sector’s pre-provision operating profit dipped 2% YoY and 1.4% QoQ in Q4 amidst weak revenue lines. Non-interest income fell 11.3% in Q4 whilst interest income inched up by a meagre 0.5%

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BIMB saw the strongest growth in pre-provision operating profit at 31.8% YoY in Q4 buoyed by above-industry loans growth, stable NIM and strong Takaful contribution. 

The pre-provision operating profit of RHBBank also outperformed the banking sector’s, coming in at 5.1% and 7.7% for Q4 and FY18 respectively versus the sector’s -2.0% and 2.1%.

On the other hand, CIMB was hit by weak pre-provision operating profit which fell 18.2% YoY and 8.9% QoQ. Net interest margin stabilised at 2.11% although margins will widen slowly by an estimated 3-5bp in 2019 amidst heightened deposit competition and steep funding costs.