CGSI Research retained its “overweight” stance on the banking sector.
PETALING JAYA: The banking sector is expected to remain resilient as new regulatory refinements take shape, with the latest policy adjustments seen causing minimal earnings disruption and supporting continued lending growth into 2026.
According to CGS International (CGSI) Research, Bank Negara Malaysia’s (BNM) latest policy statement on personal financing will likely have a limited impact on banks’ profitability and loan growth.
The research house noted market sentiment could even improve following the central bank’s decision to retain the existing financing tenor.
“We are positive on BNM’s decision to keep the maximum tenor for personal financing at 10 years as any reduction in the tenor would spell lower affordability,” CGSI Research said.
“In our view, the prohibition to offering personal financing based on the Rule of 78 method will not have a material impact on banks’ net interest margin,” it added.
BNM’s policy statement on personal financing, issued on Sept 30, preserved the maximum tenor at 10 years after industry consultation.
The central bank also introduced new consumer safeguards.
This included a requirement for borrowers seeking personal financing exceeding RM100,000 to attend financial literacy courses organised by lenders and the Agensi Kaunseling dan Pengurusan Kredit or the Credit Counselling and Debt Management Agency.
CGSI Research viewed the measures as pragmatic.
“In our view, the ruling stated in the policy statement for personal financing will have a minimal impact on banks’ personal financing,” it said.
“After taking into consideration feedback from industry players and the public, BNM maintained the maximum tenor for personal financing at 10 years in the policy statement,” it noted.
As of end-June 2025, personal financing accounted for just 5.2% of total banking system loans.
This was with Bank Islam Malaysia Bhd having the largest exposure at 30.5% of its financing portfolio. Malayan Banking Bhd
and Hong Leong Bank Bhd (HLB) held about 2% each.
CGSI Research retained its “overweight” stance on the banking sector, citing potential re-rating catalysts of ongoing write-backs in management overlay and expectations of increases in the dividend payout ratios for most banks.
It identified HLB, RHB Bank Bhd and CIMB Group Holdings Bhd as preferred picks.
Separately, the Hire-Purchase (Amendment) Bill 2025, tabled in Parliament on Oct 6, proposes to replace the traditional flat-rate system with a reference rate and effective interest rate mechanism.
CGSI Research noted that any resulting impact on early redemption of hire purchase loans “is likely to be minimal”, as banks could adjust lending rates to preserve yields.
The research house expected domestic banks to navigate policy shifts smoothly, maintaining stable asset quality and steady dividend prospects into the coming year.
