KUALA LUMPUR (Feb 26): Malayan Banking Bhd (KL:MAYBANK) is guiding for a year-on-year loan growth of 4% to 5% in FY2026, as it aims to bounce back from the modest 1.7% expansion it charted in FY2025.

Group chief financial officer Shafiq Abdul Jabbar said the target is set on a constant currency basis, to account for regional exchange rate volatility, particularly the strengthening ringgit against the Singapore dollar and Indonesian rupiah. 

“We are looking at growing around system levels, perhaps slightly above or below, depending on product and market,” he said during a media briefing on the group’s latest financial results on Thursday.

For FY2025, Maybank’s gross loans stood at RM686.5 billion, up 1.7% year-on-year; it had previously guided for a loan growth of 5% to 6% for FY2025. Growth for the year was uneven across its key markets: Malaysia expanded 6% and Singapore rose 5%, while Indonesia contracted 3.1% due to portfolio rebalancing to conserve margins.

In its home market, Maybank is targeting loan growth of about 5% to 6%, broadly tracking the projected gross domestic product, or GDP, growth of around 5.1%, and system credit growth of about 5.2%.

Shafiq said domestic expansion will be supported by resilient consumer spending, a technology upcycle and infrastructure investments, including data centre-related developments.

The bank also expects trickle-down effects from large corporates to small and medium enterprises (SMEs), bolstered by the momentum in the Johor-Singapore Special Economic Zone (JS-SEZ) and tourism boosts from the Visit Malaysia campaign.

Hence, management remains constructive on the consumer and SME front, citing steady demand and a favourable domestic credit environment.

For Singapore, Maybank expects loans to grow between 4% and 5%, roughly in line with the city-state's system credit expansion of about 5.3%, even as GDP growth is expected to moderate to 3.6%.

Datuk John Chong Eng Chuan, group CEO of global banking, said Singapore's growth will continue to be driven by artificial intelligence (AI)-related investments and construction activity, alongside strong capital inflows.

While Singapore's benchmark interest rates are expected to ease by 30 to 40 basis points, management expects slower net interest margin compression. The bank also sees opportunities to lift non-interest income, particularly through wealth management and foreign exchange (FX) fees, as customers increase hedging and investment activity amid currency swings.

The group's Singapore loans grew 5% in FY2025, supported by consumer and financial services as well as selected corporate segments.

Indonesia remains a turnaround priority for the banking group. Despite the 3% contraction in FY2025, Maybank is guiding for 8% to 10% loan growth in the republic for FY2026 — versus the anticipated system loans growth of between 9% and 11% — while Indonesia's GDP is expected to grow around 5%.

Chong said the loan book contraction in FY2025 was a result of the group's shift away from lower-yielding state-owned enterprise exposures towards higher-return large local corporates and cross-border clients.

The bank focuses on inbound Malaysian and Singaporean corporates investing in Indonesia, Chong said. This allows the bank to leverage existing regional relationships and cross-sell multiple products, including deposits, FX and payroll services.

Key priority sectors include plantations, healthcare, renewable energy and infrastructure. Management aims to push Indonesia's return on equity, or ROE, into the double digits over the medium term.

Meanwhile, it is also accelerating a digital revamp in Indonesia, which has been selected as the first market to roll out the bank's "next-generation" mobile app early next year.

Beyond loan growth, Maybank is guiding for 2.05%-2.10% net interest margins for the group for FY2026, with credit charges expected to normalise to around 20 basis points (bps), following an exceptionally low 8bps in FY2025.

Maybank shares fell as much as 7.6% in the afternoon session following the release of the group's latest results, before recovering some losses to close at RM12, still down 2.9%. This values the bank at RM144.97 billion. Over the past year, the stock has gained over 12%.

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