Banks still well capitalised: Maybank

PETALING JAYA: The banking sector is still well capitalised despite the perfomance of the stock market last week and the weakening ringgit, said Maybank group president and CEO Datuk Abdul Farid Alias.
“(For) the banking sector, we don’t have any worries. Our total capital ratio of the banking sector is 15.2%. It’s higher than the total capital ratio that you saw in December 2010 at 14.8%. Even if you compare (with that) prior to 1997, our total capital ratio is a lot higher. Both total capital ratio as well as Tier 1 capital ratio. For the banking sector, from a capital perspective, from liquidity perspective, we are okay. We can manage this,” he told reporters at the launch of Maybank@Monash yesterday.
Last Friday, Bursa Malaysia’s FBM KLCI breached the psychological 1,600- point level to end at 1,590.57 points while the ringgit closed 1.68% lower at 4.0750/0800 against the US dollar.
“On the volatility of the currency, from an economic perspective you have to choose which one to let go, to manage external shocks. We saw a lot of external shocks recently. We saw commodity prices collapse last year, especially oil. We saw demand also has collapsed on exports. So we have to decide which one to let go and the volatility now is seen on foreign exchange,” he said.
Farid said many factors have contributed to the volatility including the 3% devaluation of the yuan last week, which spooked the market. He added that the ringgit is not the only currency affected, with the Brazilian and Australian currencies also declining against the US dollar.
Farid believes that once external shocks stabilise, the volatility will go away, but did not say when he expects this to happen.
“In the meantime, we should focus on the real economy in Malaysia because, at the end of the day, the fundamentals of the real economyare still very strong relative to other economies.”
Last Thursday, Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz, in announcing the country’s second quarter economic performance, said the volatile economic environment is likely to continue for several months until there is certainty on the policy direction that will be taken by major economies, such as the US and Europe.
Malaysia posted gross domestic product growth of 4.9% in the second quarter, slower than the 5.6% in the first quarter, driven mainly by domestic demand.
“Fundamentally, the economy is strong, especially when you look at it relative to other countries. For the second half of the year we believe that it’s probably going to reflect more of the second quarter. From our house’s perspective, the implied growth for the second half should be around 4.5% but I won’t be surprised if the market surprises us on the upside,” said Farid.
Despite the volatile economic environment, he added, consumer and retail banking is still seeing growth.
“Surprisingly, consumer banking is still growing albeit a bit slower than what we saw last year, but growing as we anticipated. (For) total loan growth in Malaysia, we are looking at 9% (year to date), slightly slower than what we saw last year at 10% to 10.5%. There is economic activity going on in the market right now,” he said.
Maybank@Monash is the first university campus lounge to be launched under the Maybank@Campus concept aimed at Gen Z and millennial students.
Farid said Maybank will open four more campus lounges this year, with target of 12 campus lounges over the next two years, in both public and private universities. The investment cost for a campus lounge is less than 10% of the cost of a banking branch, which is about RM1 million.
“Our intention is to ultimately expand this new concept to even more campuses in the country progressively and possibly take this concept to our key home markets in Asean where we operate,” he said.