Malaysia's banking sector's profitability may decline

The 25 basis point increase in the Overnight Policy Rate (OPR) will benefit fixed deposit (FD) savers after the real rate of return on deposits will return to positive in 2018.

KUALA LUMPUR: The country’s banking sector is likely to see its profitability decline as revenue growth slows and credit costs rise.

However, the banks’ capital buffers will further improve as a result of slower asset growth and this will help financial institutions withstand any increase in asset risks.