KUALA LUMPUR, Jan. 2 (Xinhua) -- Research houses have anticipated stable net interest margins and improving operating conditions for Malaysia's banking sector in 2026.
Public Investment Bank said in its recent report that it foresees an improving operating environment for Malaysia's banking sector, given a clearer direction of U.S. tariffs and supportive domestic-oriented growth.
"We are forecasting higher loan growth in FY26 at 5 percent to 5.5 percent, as compared to our FY25 forecast of 4.5 percent to 5 percent, in line with higher in-house GDP forecast in FY26," said the research house.
In the absence of further rate cuts and with easing liquidity pressure as system deposits and current account and savings account (CASA) ratios trend upward, it foresees the sector's net interest margin to remain stable.
Having weathered economic volatility and many challenges to funding costs in 2025, Maybank Investment Bank also expects 2026 to be operationally a more conducive year for Malaysia's banking sector.
The research house has projected the sector's aggregate operating profit and net profit growth of 4.7 percent and 5 percent, respectively, as compared to 3.4 percent and 3.8 percent in 2025.
Maybank also highlighted that the domestic economic growth of 4.5 percent supports the industry loan growth of about 5 percent.
Meanwhile, Kenanga Research said that 2026 is expected to be more challenging for Malaysia's banks, underpinned by softer gross domestic product (GDP) and loan growth.
"We anticipate net interest margin recovery in the second half of 2026, as the assumed overnight policy rate (OPR) would remain stable at 2.75 percent throughout 2026, thereby allowing deposits to fully reprice," said the research house. ■
