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Why non-interest income is Malaysian banks' key earnings driver
Analysts' pre-provision operating growth forecast of 8% depends on its recovery.
UOB Kayhian reports that loans growth remains modest at 5.5% to 6.0% while the positive NIM expansion trend in 1Q17 is expected to moderate downwards on the back of higher funding cost expectations given the elevated system LDR of 90% and continued lag in deposit growth (3%) vs loans growth (6%).
"As such, our 2017 pre-provision operating growth forecast of 8% is underpinned by expectations of a sharp reversal in non-interest income fortunes in 2017 from stronger investment banking and lumpy corporate loans disbursement fee income."
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