Maybank's asset quality, profitability to remain stable: Moody's

Despite the sluggish economic growth, the bank’s problem loan ratio is predicted to stay at 1.5%. 

Malayan Banking Berhad or Maybank will have stable asset quality and profitability in the next 12 to 18 months, according to a report by Moody's.

The bank maintained a stable outlook, which Maybank attributed to its strong capitalisation and liquidity. 

Despite the sluggish economic growth, Maybank's problem loan ratio is projected to remain at 1.5%. 

Repayment assistance loans have also decreased to less than 1% in Malaysia and other key markets. Maybank maintains conservative loan-loss reserves at over 133% of problem loans as of 31 March.

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Maybank's return on tangible assets is expected to remain stable at around 1.0% in the next 12-18 months. 

The bank's net interest margin will contract due to deposit competition, and operating expenses will rise as part of a digitalisation plan. However, lower credit costs and the absence of a one-off tax levied in 2022 will offset the impact on profitability.

Maybank's CET1 capital ratio will stay strong at approximately 15% due to the bank's dividend reinvestment scheme and ongoing optimisation of risk-weighted assets. 

The bank's liquidity will remain robust, supported by its prominent transaction banking franchise and prudent management, Moody’s said.

As of 31 March, the liquidity coverage ratio stood at 146%, exceeding the regulatory minimum of 100%.