KUALA LUMPUR (Aug 28): Malayan Banking Bhd (KL:MAYBANK), the largest bank in Malaysia by assets, said on Wednesday lending margins will improve in the coming quarters though loan growth could moderate.

Net interest margin —a measure of profitability from interest charged on loans after paying returns on deposits — likely bottomed for Maybank, chief executive officer Datuk Khairussaleh Ramli told reporters at a post-earnings briefing, following a 15 basis points year-on-year decline in the second quarter.

The “worst is over… because of our ability to manage cost of funds better," he said. “"We are optimistic that the remaining two quarters will improve sequentially… the trend is in the right direction.”.

Banks in Malaysia have been grappling with intense competition as they raised returns on deposits, pressuring net interest margins in a market where three dozen foreign and local lenders jostle for business.

Lenders also have to maintain comfortable levels of deposits and other buffers to support loan growth in an economy expected to accelerate this year.

Maybank’s loan growth may slow to between 7% and 8% this year, Khairussaleh said, following a 10.4% year-on-year expansion in the January-June period this year.

"The pipeline is good, but we also need to take into account our capacity to grow loans with respect to deposits,” he said and emphasised the importance of juggling loan growth with the ability to fund it at a reasonable cost to protect margin and optimising capital.

Maybank is also seeing positive impact from the growing demand for data centres in Malaysia, Khairussaleh noted.

“We have benefitted from the data centre growth,” he said, noting that Maybank has captured around RM2.2 billion worth of deals so far, and is looking at another RM1 billion in the pipeline from three potential projects.

He also flagged opportunities in sustainable finance, which could benefit the bank not just in Malaysia but across the region. Another potential is in the semiconductor sector, by looking at the full supply chain and financing possibilities, he added.

Maybank said it has exceeded its own sustainable finance target of RM80 billion by FY2025, dishing out green loans and financing totalling RM83.22 billion as at June 2024.