A veteran banker who led a Malaysian lender to record profit said the Southeast Asian country can hold off on further cutting borrowing costs as current levels are sufficient to support growth.
“Inflation numbers are looking pretty healthy and the currency has been on the right side of strength for Malaysia,” Alliance Bank Malaysia Bhd group chief executive officer Kellee Kam said in an interview on Tuesday.
Malaysia’s central bank lowered its overnight policy rate (OPR) in July, the first cut in five years, in a pre-emptive move to bolster the economy. But it left the benchmark unchanged last week as economists said low inflation and resilient consumption gave it room to keep the rate steady. Bank Negara Malaysia (BNM) also injected more funds in the banking system in May to encourage lending and economic activity.
The central bank will probably hold the benchmark rate at 2.75% at its final policy meeting for the year in November, a level that would be “sufficient” to support the economy’s growth, said Kam, a banker of more than 25 years, with stints at Bank of America Corp’s local unit and Malaysian lender RHB Bank Bhd.
Growth risks seem to have eased after Malaysia secured a 19% levy on exports to the US, lower than the 25% rate that US President Donald Trump had threatened to impose. The central bank estimates the economy will grow 4% to 4.8% this year and a survey conducted by Bloomberg News in August showed that the OPR may remain unchanged through 2026.
In the swaps market, traders are pricing in an almost 70% probability of a rate cut by Malaysia’s central bank within the next 12 months, according to data compiled by Bloomberg.
Consumer spending will fuel Malaysia’s growth, Kam said, noting that the bank’s clients had resumed investments since the middle of the year after previously holding back due to uncertainty on US tariffs.
The country’s smallest listed lender estimates its net interest margin, a key gauge of profitability, to come in between 2.37% to 2.42% in the current financial year ending March 31, 2026, down from its previous projection of 2.45%, Kam said. Still, the range is above the industry average of 1.95% to 2%, he said.
Separately, DBS Group Holdings Ltd’s plan to buy a stake in Alliance Bank has stalled as Singapore’s biggest bank is yet to get regulatory approval to start talks, Bloomberg News reported last week. Kam declined to comment on the matter.
The CEO expects Alliance Bank to clock in loan growth of 8% to 10% in the current financial year, boosted by demand from small- and medium-sized firms. That’s above the bank’s estimate of the industry average of 5% to 5.3%.
Source: theedgemalaysia