In an atmosphere of intense competition, sputtering economy, and ambitious regional expansion, Maybank is banking on a strategy to improve efficiency across the organisation.
December 21, 2015 | Clement Hu
After years of rosy growth, the Malaysian banking industry is facing tougher macroeconomic and regulatory conditions. Consumer consumption took a beating after the implementation of the 6% goods and services tax on April 1st 2015. This was worsened by inflation caused by higher import prices due to the weakening ringgit. The consumer price index (CPI) has been floating above 2.5% in 2015 despite lower fuel costs, which resulted in negative transport inflation. Taken together, this volatile cocktail resulted in weaker loan demand for banks.
A key driver in the industry’s loan growth, residential mortgages, has moderated from the average 14% in 2014 to around 12% in 2015. New mortgage approvals plunged 19% year-on-year (YoY) in September. On a bright note, exporters are benefitting from the weaker ringgit, therefore, business loans have been picking up. Annual business loans growth rose from an average of 7% to around 9% in 2015.
Deposits grew 4.8% YoY in July, the slowest since September 2002, and is expected to weaken further. Banks have been forced to raise interest rates to pin down fleeing deposits, as competition further intensified ahead of the 2019 deadline to comply with Basel III capital requirements. As a consequence, net interest margins suffered. Capital market activities also remain lackluster due to the ongoing 1MDB saga and heightening racial tensions. Current foreign fund outflow from the country was above RM18b as of end-September.
As the leader and many a times a first mover in the Malaysian banking industry, Maybank has launched several rationalisation and productivity programmes since 2009. Launched in 2012, Maybank’s strategic cost management programme was aimed at preventing wasteful expenditure and overspending and nurturing a cost-conscious culture. This effort was intensified in 2014 by improving IT efficiency and reining in mar...
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