KUALA LUMPUR (Oct 13): Malaysian banks could see deposits inflows of between RM5.7 billion and RM10.1 billion because of the minimum wage hike and payroll tax deduction for non-MSMEs announced in Budget 2027.
In a research note on Malaysian banks, Nomura said the figure was based on the increased minimum wage of RM2,000 and new rules tying corporate tax deductions to formal wage payments made through the banking system.
It said even though a large proportion of these new salaries may be withdrawn, spent or remitted overseas shortly after receipt, there could still be benefits for account penetration, transaction banking, remittances and low-cost deposit mobilisation.
"We believe these measures could help stabilise household
loan growth, which has been moderating, by improving borrowing capacity and affordability, particularly among lower-income households," Nomura said.
The research house also downplayed concerns about the impact of rising bond yields on Malaysian banks’ profits, capital strength and dividend‑paying capacity.
“We believe market concerns over the impact of rising bond yields on Malaysian banks' earnings, capital positions and dividend-paying capacity are overstated,” Nomura noted.
Higher yields generally hurt banks as they take larger paper losses from lower prices of the bonds they hold, which eats into capital and forces them to book losses if they sell. Investors may also demand higher returns on corporate bonds, affecting appetite for new issuances.
At the time of writing, Malaysia’s 10‑year government bond yield stood at 3.84%, still below the US 10‑year yield of 5.19%.
Since the tabling of Budget 2027 last Friday, the FBM KLCI has risen 9.56 points, or 0.59%, from 1,608.45 to close on Tuesday at 1,618.01, supported by gains in banking heavyweights Malayan Banking Bhd (KL:MAYBANK), Public Bank Bhd (KL:PBBANK) and CIMB Group Holdings Bhd (KL:CIMB).
Accordingly, Nomura upgraded Public Bank to ‘buy’ from ‘neutral’ with a target price (TP) of RM5.40.
The research firm maintains it ‘buy’ ratings on CIMB Bank but with a reduced TP of RM8.90 and revised Maybank's TP to RM11.70.
The Bursa Malaysia Financial Services Index, which also tracks non‑bank firms such as insurers and stockbrokers, rose 1.85% to 18,766.17 at Tuesday's close, up from Friday's 18,424.82.