RETAIL BANKING | Staff Reporter, Malaysia

See how MFRS9 could affect Malaysian banks' credit costs

Guidance on credit cost run rates from banks post-MFRS9 remains sketchy.

MFRS9 implementation could pose slight upside risk to Malaysian banks' credit cost estimates, UOB Kay Hian reports. The research forecasted a slight increase in sector aggregate net credit cost to 40bp in 2018 from 37bp in 2017 despite MFRS9 implementation.

Here's more from UOB Kay Hian:

The likes of Malayan Banking and CIMB are still guiding for a gradual improvement in provisions As such, there could be an upside risk to both our and consensus credit cost forecasts in 2018.

As banks have the flexibility to build up provisions in the balance sheet via the transfer of reserves from retained earnings to regulatory reserves to 1 Jan 18 (before the implementation of MFRS9), we believe that current credit run rates may not be a true reflection of a more normalised credit cost run rates post implementation of MFRS9.

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