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 banks’ capital position remained strong in 2018 and they also continued to record healthy profits in 2018, largely supported by income from financing activities and continued efficiency gains, according to Bank Negara Malaysia.
In its its Financial Stability and Payment Systems Report 2018 issued on Wednesday, it said the “Day 1 impact” from higher provisions under new impairment standards in the Malaysian Financial Reporting Standards (MFRS 9) resulted in lower capital ratios compared to levels in 2016 and 2017.
Notwithstanding this, banks continued to maintain sizeable excess capital buffers above the regulatory minimum. The bulk of bank capital (about three-quarters) is held in high quality loss-absorbing instruments comprising paid-up ordinary share capital, retained earnings and reserves.
Bank Negara said the banking system continued to record healthy profits in 2018, largely supported by income from financing activities and continued efficiency gains.
Commercial banks posted pre-tax profit of RM36.816bil in 2018, up 1.5% from RM35.32bil in 2017 while their interest income rose by 8.8% to RM112.47bil in 2018 from RM102.49bil in 2017.
As for investment banks, pre-tax profit fell by 98.4% to RM458.30mil in 2018 from RM909.20mil in 2017.
Islamic banking pre-tax profit rose by 12.88% to RM7.667bil in 2018 from RM6.68bil in 2017.
For the overall banking system, pre-tax profits grew at a slower pace, contributing to slightly lower annual returns on assets and equity.
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