KUALA LUMPUR, Sept. 10 (Xinhua) -- Analysts have expected Malaysia's banking sector to remain resilient despite potential slower growth amid trade tensions.
S&P Global Ratings said in a note on Wednesday that Malaysia's banking sector is well positioned to cope with trade tensions and softer growth.
Malaysian banks are facing external risks from a position of strength, and they will also benefit from Malaysia's strong labor market and stable household finances, according to the rating agency.
"We expect a dip in credit demand, resulting in slower loan growth of 4 percent to 5 percent over the next two years," said S&P Global Ratings credit analyst Nikita Anand.
However, S&P opined that Malaysian banks can sustain good profitability over the next two years, despite headwinds.
Overall, it saw Malaysian banks in strong shape to manage external risks, given their adequate capital buffers and loan loss coverage.
In addition, MBSB Research has said that Malaysian banks have a tried-and-tested game plan entering into the second half, and it expected they can make it through with minimal earnings disappointments.
This stability and certainty, coupled with higher-than-normal dividend yields, make Malaysian banks a prime beneficiary of emerging market inflows, it added.
Kenanga Research said in a note that it believed Malaysian banks remain resilient in the face of economic headwinds that could moderate loan growth, supported by their flexibility in managing investment portfolios to sustain earnings. ■
