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KUALA LUMPUR (Aug 30): Malayan Banking Bhd (Maybank) expects its net interest margin (NIM) to decline by 25 basis points year-on-year for the financial year ending Dec 31, 2023 (FY2023), primarily due to competition in funding and deposits.
Speaking at a press conference, Maybank group president and chief executive officer Datuk Khairussaleh Ramli said the banking group had already recorded a steep NIM compression decline of 23 basis points (bps) to 2.16% in the first half of the financial year (1HFY2023) compared to 2.39% in FY2022.
“I think NIM will stabilise in the second half of the year. We have a forecast NIM, which is for a compression of up to 25 basis points for the whole of FY2023.
“We have to do what is best in terms of bringing in deposits but not overly overpaying. It's hard to forecast deposit growth in 2H2023 because deposits are easy to get if you pay, right? Our focus is trying to get a current account savings account (CASA), which is more sticky and of course, cheaper,” he said.
Maybank, the country’s largest lender by assets, saw deposits rise 2.8% y-o-y to RM654.76 billion in 1HFY2023 as fixed and other deposits grew 24% and 7.4% respectively.
The CASA ratio stood at 37.7% at end-June, down from 39.1% at end-March and 46.7% in June 2022.
On the other hand, Khairussaleh expects the overnight policy rate (OPR) to remain at 3% for the rest of the year, and said that loan growth momentum will be moderate given the expected economic slowdown, such as China's weaker reopening and slower markets.
“At the moment, we had a loan growth of 5.3% y-o-y. We have a target of between 5% to 6% for this year,” he added.
Bank Negara Malaysia maintained the OPR rate at 3% in July, having surprised most observers in May when it raised the OPR by 25bps from 2.75% to 3%, after hitting the pause button at monetary policy meetings in January and March. This took the OPR to its pre-pandemic level of 3%. Before that, BNM had raised the OPR by a total of 100bps between May and November last year.
Shares of Maybank closed up two sen or 0.22% to RM9.11 on Wednesday, giving it a market capitalisation of RM109.81 billion.