This article first appeared in The Edge Malaysia Weekly on August 18, 2025 - August 24, 2025

A slew of challenges this year, including tariff uncertainties and a recent cut in the overnight policy rate (OPR), has made it more challenging for banks to expand their businesses as strongly as last year.

Malayan Banking Bhd (KL:MAYBANK) — the country’s largest banking group by assets and Southeast Asia’s fourth largest — is prioritising profitable growth in the expansion of its community financial services (CFS) business this year.

“While we want to pursue growth, we’re not going to pursue growth at all cost,” group CEO of CFS Syed Ahmad Taufik Albar tells The Edge in a recent interview. CFS refers to the grouping of Maybank’s consumer, small-to-medium enterprise (SME) and wealth management businesses.

“My target is that the net interest margin (NIM) for group CFS must be at least maintained, if not slightly improved [from last year]. And I will pursue growth with that in mind,” Taufik says. He declines to reveal specific NIM figures for CFS. 

Taufik took on the CFS role in March 2024, having joined Maybank from RHB Bank Bhd (KL:RHBBANK), where he headed the group wholesale banking business.

CFS is a key business segment for Maybank, accounting for almost 60% of the group’s net operating income and about 44% of profit before tax in the financial year ended Dec 31, 2024 (FY2024). It constituted 67% of the group’s loans of RM675 billion (see chart).

In recent years, banks have struggled to grow NIMs amid the industry’s intense competition for deposits, a relatively cheaper source of funds. Adding another layer of challenge to this is the 25 basis point (bps) cut in the OPR by Bank Negara Malaysia on July 9, which required banks to reduce their lending reference rates by the same quantum. Most banks have also announced a reduction in their deposit rates.

“NIM is one area that we pay a lot of attention to. We need to pair the reduction in the lending rates to the reduction in deposit rates. By doing so, we have a solid ground with which to manage our NIM. But there are also other levers, such as instituting pricing discipline. At Maybank, we have started doing so, in particular in CFS,” says Taufik.

“I’ve made sure that my leadership team, our team on the ground at the branches, our salespeople, all practise pricing discipline. It means being very segment-focused in our approach.”

Taufik explains that Maybank is more prudent about extending preferential rates.  “There are certain customer segments who go above and beyond in their engagement with us: those who entrust us with a significant volume of their financial needs, who have been with us for many years, who refer their family members to us, and even entrepreneurs whose business accounts are also with us. We should acknowledge these deep and trusted relationships through tailored solutions, as a reflection of the confidence placed in us.”

“This approach allows us to manage our financial health responsibly while keeping the customer at the centre of our focus,” he says.

Maybank is targeting for group CFS loans and deposits to each grow by around 6% this year. Last year, CFS loans grew 8.2% while deposits grew 8.7%.

“Our target is not to grow loans significantly over gross domestic product growth, because then it would mean we are taking unnecessary risk,” Taufik states.

The biggest area of focus in terms of growing CFS loans is non-retail loans, particularly SME. “We want to push the SME growth a lot more, but we also need to figure out what are the segments that are more resilient than others. We feel that SMEs in manufacturing is one area, and we’re trying to work more closely with them to see how we can support them. This doesn’t mean that we ignore other sectors and sub-sectors … but manufacturing, we think, will be a good start for us [to place our] focus.”

In the consumer space, mortgages — a highly competitive business — will also drive CFS loan growth. “For Malaysia alone, it’s about a RM157 billion loan base. Our undisbursed stock is north of RM20 billion. So, we think mortgages, even without us promoting it much, just by the sheer size of the stock we have, will continue to be a solid contributor to loan growth,” says Taufik.

Maybank’s mortgage growth in Malaysia will likely be at a high single-digit pace this year compared with the 12.1% growth last year, he says. “The proportion of preferential rates [given for] new mortgages that we approve [for CFS in Malaysia] has come down in 2025, versus 2024. When that happens, you might ask — would it not affect growth? Yes, it would. But as I’ve said, we want to pursue quality, sustainable growth at the right price. So, I’m okay that the growth will taper down to maybe a high single-digit growth.”

Maybank’s target is to grow CFS loans in Malaysia by 5% to 6% this year compared with 9.1% last year. “As for deposits, we do want deposits to grow a little faster than loans [as] we want to improve our loan-to-deposit ratio (LDR),” he says. LDR in Malaysia stood at about 92.4% as at end-March.

Analysts note that it will be no easy feat for Maybank to grow deposits strongly, given how banks have been going all out to chase deposits in a bid to back their loan growth.

Taufik admits that it will be challenging. The fight for deposits will be no less intense despite rates having come down since the OPR cut, he says.

“The battleground will be at a lower rate. The fight in terms of the campaigns, the innovation, the bundling of the products, reaching out to the customers through digital channels — I don’t think any of that will abate anytime soon among the banks,” he says, when asked about the state of deposit competition in Malaysia.

“There are ebbs and flows — certain months, you’ll see many campaigns coming up from the industry and certain months, it’s a little quiet. But generally speaking, the battle for deposits is still there, still intense, and I think it will remain so.”

One of the reasons, he says, is that demand for loans in Malaysia has been “particularly resilient” despite macroeconomic uncertainties. “When loan growth is resilient, the fight for deposits will continue to be there, because you need to fund the loan growth. Even in Singapore, the battle for deposits is intense,” he shares.

Asked if Maybank’s CFS business had felt any impact from the country’s new digital banks, Taufik says: “We have observed some impact in deposit outflows in response to digital banks that offer very attractive rates. But these flows tend to be transient. Once the promotional rates end, we often see deposits returning. So there is an ebb and flow and, generally speaking, I’m quite happy with our deposit growth so far this year.”

Maybank’s CASA (current account and savings account) ratio for CFS in Malaysia stood at 42.2% at end-March.

Meanwhile, as Maybank is counting on non-interest income to help grow profits, the wealth management business has become increasingly important. It’s a business that the group wants to grow organically. “No M&A (mergers and acquisitions) for us, we will grow it organically because the franchise is strong,” Taufik says.

The group’s assets under management (AUM) stood at RM341 billion as at 1QFY2025. For FY2025, Maybank is striving for double-digit year-on-year growth in total AUM (conventional and Islamic funds combined) and for Islamic AUM.

“We had a really good year [for wealth management] in 2024, so we want to keep the momentum in 2025 and have set ambitious targets. The first few months of this year, we saw customers holding back a little on investments [given the macroeconomic uncertainties] and the stock market also wasn’t performing so well. But, it doesn’t mean that we cannot recover in the second half of the year,” he states. 

To ensure further growth in wealth management, Maybank is focused on providing “an efficient and seamless” experience for customers, and improving its cross-border servicing, he says. In Malaysia, Maybank’s AUM stood at RM187.6 billion as at 1Q2025.

Despite the host of global macroeconomic uncertainties this year, chiefly on tariffs, Maybank’s asset quality has been relatively stable thus far. Consumer gross impaired loans (GIL) ratio is “gradually and steadily improving” and is forecast to improve slightly on a year-on-year basis, Taufik says.

Malaysia’s exports to the US are subject to a 19% tariff effective from Aug 8, with the rate having been negotiated down from the US’s intended 25%.

While Maybank SMEs have very small direct exposure to US tariffs, it remains to be seen if there will be a secondary impact on them.

Taufik, however, points out that the bank is vigilant about detecting early signs of trouble. “We can confirm that less than 1% of our SME clients have direct exposure to the US. Unlike during Covid-19 where support was largely customer-initiated, we’ve adopted a more proactive, data-driven approach. We analyse transaction patterns to identify clients who may be facing headwinds — often even before they realise it themselves.

“We put available options on the table early, including a fast-lane approval process for R&R (rescheduling and restructuring of loans), because speed matters. If you don’t come in early enough to help, SMEs may miss key payments and risk cascading impacts on their operations or supplier relationships.”

In general, SMEs, particularly the smaller ones, still face headwinds and need to be monitored closely. In Malaysia, those that are vulnerable include furniture makers and those in the electronics sector, Taufik says.

Maybank remains the market leader in digital transactions, with a market share of 50.2% (as at end-March) in total digital transaction volume in Malaysia. According to Taufik, as at end-2024, 81.4% of new sales were through digital channels.

Despite the strong digital penetration, it remains important for the group to maintain physical branches. It aims to have multiple channels through which it can interact with customers. 

Maybank had 379 branches in Malaysia as at July 2025, which includes Islamic branches, service centres and wealth centres.

Maybank’s share price has gained 2.2% this year, closing at RM9.84 on Aug 14, giving the lender a market value of RM118.88 billion. 

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