Banks' biggest challenges in 2003

Banks in Malaysia are in for a challenging year. In its recent 2003 market Outlook Strategy report, RHB Research Institute maintains a "neutral" weighting on the sector and has forecast an anaemic 9 per cent growth in net banking profits for financial year 2003. The research house gives its outlook on the sector. 

THE banks’ biggest challenge in 2003 is to sustain operating profitability against a backdrop of stagnating to declining top-line revenue. Loan growth is modest but net interest margins (NIM) are under further pressure. Cost management becomes crucial in sustaining operating profits as revenue base comes under intense pressure.