Inovatif

Tag: banking

  • UOB Malaysia reports record high NPBT of RM2.2 billion in 2024

    UOB Malaysia reported a record net profit before tax (NPBT) of RM2.2 billion and total operating income of RM4.7 billion for the financial year ended 2024. The Bank’s net profit before tax increased by 15.9 per cent (2023: RM1.9 billion), while operating income grew by 2.3 per cent (2023: RM4.6 billion). The Bank’s financial performance for 2024 was disclosed in its Annual Report 2024.

    The increase in operating income was backed by steady growth across all income streams, including net interest income, Islamic banking, net foreign exchange gains and fees and commissions. Meanwhile, total expenses decreased by RM22 million due to disciplined cost management, while total allowances for expected credit losses declined significantly by 52.1 per cent to RM159 million with improved asset quality and lower provisions for both impaired and non-impaired assets.

    In 2024, UOB Malaysia’s gross loans, advances and financing grew by 2.1 per cent to RM109.5 billion (2023: RM107.2 billion), supported by steady growth across both its Wholesale and Retail segments. As the Bank continued to strengthen its balance sheet, it remained focus on growing and maintaining quality deposits, resulting in higher current account-savings account (CASA) ratio of more than 44%.

    Ms Ng Wei Wei, Chief Executive Officer, UOB Malaysia, said, “We are pleased to report another year of strong financial performance, with record net profit before tax of RM2.2 billion. This achievement reflects the strength of our diversified business model, supported by prudent risk management, disciplined cost control and solid performance across our core businesses. Our Wholesale Banking business has made significant strides in advancing the Bank’s sustainability and connectivity agenda, delivering double-digit growth in both sustainable financing and trade loans. On the back of good trade flows, our Global Market income also grew strongly, as we assisted our clients in managing interest rate risks in a volatile environment. Additionally, our expanded retail franchise continues to deliver strong momentum, particularly in credit card and wealth management business, following the successful integration of the Citigroup’s Consumer Banking business.”

    The Bank’s solid credit standing and stable outlook were also reaffirmed by its AAA rating by RAM Holdings Berhad (RAM Group), a distinction it has maintained since 2012. Its capital position remained strong, with a Common Equity Tier 1 ratio of 16.0 per cent and a Capital Adequacy Ratio of 19.4 per cent, well above regulatory requirements, providing a sufficient buffer to support future growth.

    UOB Malaysia leverages its regional network and expertise, supported by 11 Foreign Direct Investment teams across Asia, to connect businesses to opportunities and drive cross-border investments. Aligned with national economic strategies, it supports key growth sectors – from Penang’s semiconductor industry to the Johor-Singapore Special Economic Zone and Sarawak’s renewable energy, contributing to Malaysia’s diversified economic growth and UOB Group’s goal of becoming a leading cross-border trade bank by 2026.

    In the sustainability space, UOB Malaysia continues to actively champion sustainable financing through our comprehensive framework, validated by credible international second-party opinion providers. As a testament to its commitment to ESG within its operations, UOB Malaysia’s head office, UOB Plaza 1 Kuala Lumpur, was awarded the most energy efficient building at the National Energy Award 2024 and ASEAN Energy Award 2024.

    Recognised for its long-term stability, technological innovation and excellence in service, UOB Malaysia was named Malaysia’s Best Bank at the 32nd annual World’s Best Bank Awards 2025 – Asia Pacific by Global Finance in March 2025. The Bank was also recognised as the Best Bank and Best Sustainable Bank in Malaysia for the International Categories (2025) by FinanceAsia.

    UOB Malaysia’s Annual Report 2024 is available at uob.my/stakeholders/annual/annual.page.

  • RAM: Malaysian banks on steady footing despite external pressures

    RAM Ratings maintains a stable outlook on the Malaysian banking sector in conjunction with the release of its latest sector commentary, Banking Insight 2025 – Maintaining Momentum.

    While uncertainties from US protectionist measures and ongoing geopolitical tensions could spill over to the domestic economy, it is still too early to assess the full extent of these effects. With the US and China being key trading partners of Malaysia (approximately 14% of Malaysia’s total value-added production), the retaliatory tariff contest may dampen the positive trade momentum and Malaysia’s growth trajectory.

    “Despite these external challenges, we anticipate banks’ credit profiles to hold steady. Banks are also entering the year in strong shape, with still-solid capital buffers and asset quality at its most robust ever,” said Wong Yin Ching, RAM’s Co-head of Financial Institution Ratings.

    Key expectations:

    • Loan growth to hold steady at 5.5% in 2025. Household loans may ease slightly but will likely be the main driver of loan growth, while business loans increase from infrastructure projects and investments.
    • Capital reverting to pre-pandemic levels. The industry’s common equity tier-1 capital ratio declined to 14.3% as at end-2024 (2020-2023 average: 15.3%; end-2019: 14.6%), although still robust. Banks are cautiously raising dividends, with most estimating the impact of new Basel III reforms to be manageable.
    • GIL ratio to remain stable at 1.4% this year. The system’s gross impaired loan (GIL) ratio hit a historic low of 1.44% as at end-2024. Prudent underwriting and potential write-offs will help sustain the GIL ratio amid new challenges.
    • Funding and liquidity profiles to stay sound. As loan growth outpaced deposit growth, the sector’s loans to deposits ratio surpassed 90%. Other metrics like the liquidity coverage ratio and net stable funding ratio were kept healthy.
    • Moderate earnings increase in 2025. While 2024’s non-interest income surge may not repeat, banks are on track for moderate profit growth from stable credit expansion and a low credit cost of around 20 bps.

    RAM’s GDP growth expectation of 4.0%-5.0% for 2025 (2024: 5.1%), though slower, will be driven by domestic demand given favourable labour market conditions and accommodative interest rates.

    Investment activity will gain from progress on multi-year infrastructure projects and greater realisation of record-high levels of approved investments last year, as well as the ongoing rollout of catalytic initiatives under the national master plans. These factors are likely to stimulate business lending. On the retail front, home financing will continue to be a major growth contributor while auto lending is anticipated to normalise in line with the lower total industry volume forecast for 2025. “Beyond these, the overall loan growth trajectory will also inevitably depend on how global external risks and domestic adjustments to fuel subsidies and electricity tariffs unfold,” Wong adds.

    On the asset quality front, the weighted average credit cost ratio of eight selected local banks rated by RAM eased further to 18 bps in 2024 (2023: 23 bps). Banks’ loan loss coverage (with regulatory reserves) is strong, with the average of the eight banks improving to 143% as at end-2024 (end-2023: 134%)
    “Malaysian digital banks are also making a nascent mark on the industry, with all three operational banks ramping up deposit gathering efforts over the past year, driven by high-interest savings accounts,” said Sophia Lee, RAM’s Co-head of Financial Institution Ratings. Digital banks have also recently expanded their services to include lending, strategically focusing on specific customer segments.

    Expectedly, all three digital banks are still far from breaking even, with quarterly trends indicating that losses have yet to peak in view of high set-up costs. “The key hurdle for these banks lies in retaining tech-savvy and price-sensitive customers in a competitive market while managing acquisition costs and scaling up without assuming significant risks. Shareholders have so far demonstrated strong financial support, with all three players receiving additional capital injections in 2024,” Lee adds.

    RAM’s Banking Insight is available for download at www.ram.com.my.