KUALA LUMPUR: Maybank and CIMB, Malaysia's top two banks, expect stronger demand for corporate and consumer loans in the Southeast Asian region, driven by improving economies, to support their overall loans growth in 2018.
CIMB Group Holdings Bhd, Malaysia's second-largest bank, said it was targeting improved loan growth this year as it expects performance in its Thailand, Indonesia and Singapore units to recover. Its loan growth weakened to 0.2% last year against a target of 7%.
"We are expecting Indonesia to come in with mid-single digit loan growth, and high single digit for Thailand and Singapore (this year)," CIMB Group Chief Financial Officer Shahnaz Jammal said at an earnings briefing on Wednesday.
Domestic loans grew 6.5% for CIMB in 2017 and 5% for Malayan Banking Bhd (Maybank), lifting overall loans growth for both banks.
"(With the strong external environment) I think the investment and capex cycle will start and that will translate to a bit of loan growth on the corporate side," Maybank Group President and CEO Abdul Farid Alias said at a separate results briefing.
Maybank, Malaysia's largest bank by assets, reported a 4% group loan growth in 2017, a rate it targets this year as well.
Both banks recorded comparable net interest margins (NIMs) -- the difference in interest paid and earned and a measure of bank profitability -- with CIMB at 2.63%and Maybank at 2.36%. While Maybank expected an expansion in NIM of 5 basis points in 2018, CIMB projected a 5-10 basis points compression.
CIMB saw higher provisions in the Singapore and Thailand markets for commodity-related loans last year, while Maybank said provisions for oil and gas loans had reduced.