Banks' NIMs to contract further by 5% to 10%

Malaysian banks have sound buffers, with adequate system profitability, capitalisation and liquidity which will help cushion against rising asset-quality, funding and liquidity risks.

PETALING JAYA: Net interest margins (NIMs) of banks are expected to contract by between five and 10 basis points (bps) this year, an improvement from a contraction of 12 bps last year amid some banks raising their base rates (BR).

Maybank IB Research analyst Desmond Ch’ng told StarBiz: “ NIMs have held up much better than expected due to proactive asset-liability mix management by the banks. Moreover, Hong Leong Bank and Public Bank have buffered their NIMs with the recent 10 bps points hike in their base rates.