Banks poised for stable margins in second quarter
Building on this, analysts estimate that the SRR cut has released about RM19bil in liquidity into the banking system. CGSI Research said banks could have benefitted from additional interest income earned from the funds released, potentially lifting banks' net interest income (NII) growth.
'With this, banks' NIM could be stable quarter-on-quarter (q-o-q) in 2Q25 with an upward bias. As a preview of 2Q25 financial results, we expect core net profit of banks under our coverage to come in at between RM9.2bil and RM9.3bil, slightly below the RM9.37bil recorded in 1Q25,' CGSI Research said in a report.
The research firm said it was not overly concerned about the potential q-o-q upturn in loan loss provisioning (LLP) in 2Q25, as the credit charge-off rate is likely to remain low at about 15 basis points, which is below the pre-Covid-19 level of 25 basis points.
As for loans, growth is expected to come in at 5% year-on-year (y-o-y) by end-June 2025, slightly lower than the 5.2% recorded at end-March.
According to CGSI Research, loan growth in the banking sector showed a V-shaped pattern, easing to 5.1% y-o-y at end-April 2025 before recovering to 5.3% by end-May.
This was driven by fluctuations in business loan growth, which slowed from 4.8% y-o-y in March to 4.6% in April, then picked up to 5% in May. In contrast, household loan growth remained steady at around 5.9% throughout the three months.
Meanwhile, the research firm expects the gross impaired loan ratio to be around 1.45% at end-June 2025, roughly in line with 1.42% at end-March.
Going back to 1Q25, CGSI Research said three banks, namely, Hong Leong Bank Bhd (HLB), Affin Bank Bhd and Alliance Bank Malaysia Bhd , had recorded double-digit y-o-y core net profit growth, which was primarily driven by lower LLP.
Noteworthy too was that Malayan Banking Bhd delivered a record-high core net profit of RM2.59bil in 1Q25, thanks to a 17.9% drop in LLP.
HLB's core net profit of RM1.35bil in 1Q25 was also an all-time high, but this was lifted by a RM399mil write-back in management overlay, said the research firm.
Ongoing write-backs of management overlays by banks are the potential re-rating catalyst for the sector.
This, along with expectations of higher dividend payout ratios by most banks, supports CGSI Research's 'overweight' rating on bank stocks.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New Straits Times
8 hours ago
- New Straits Times
Deputy agriculture and food security minister heads list of Pahang award recipients
KUANTAN: Deputy Minister of Agriculture and Food Security Datuk Arthur Joseph Kurup heads the list of 58 recipients of state awards, honours and medals in conjunction with the 66th birthday of the Sultan of Pahang, Al-Sultan Abdullah Ri'ayatuddin Al-Mustafa Billah Shah. The awards were presented by the Sultan at an investiture ceremony held at Balai Mahkota, Istana Abdulaziz, here today. Also in attendance were the Tengku Ampuan of Pahang, Tunku Azizah Aminah Maimunah Iskandariah, and the Tengku Mahkota of Pahang, Tengku Hassanal Ibrahim Alam Shah. Pahang Menteri Besar Datuk Seri Wan Rosdy Wan Ismail and members of the state leadership were also present. Arthur was among the recipients of the Sri Sultan Ahmad Shah Pahang (SSAP) award, which carries the title Datuk Seri, along with Pahang state secretary Datuk Nazri Abu Bakar, Bank Negara governor Datuk Seri Shaik Abdul Rasheed Abdul Ghaffour, and Army chief General Tan Sri Muhammad Hafizuddeain Jantan. Also conferred the SSAP were Malaysia External Trade Development Corporation (Matrade) board member Datuk Seri Ahmad Fadil Shamsuddin, Matrade chief executive officer Datuk Mohd Mustafa Abdul Aziz, director of the National Budget Office, of Finance Ministry, Datuk Ab Rahim Ab Rahman; and deputy secretary-general (Finance) of the Health Ministry (MOH) Datuk Zahrul Hakim Abdullah @ Ab Allah. Malaysian Fire and Rescue Department director-general Datuk Nor Hisham Mohammad, federal police Management Department director Datuk Abdul Aziz Abdul Majid; Malayan Banking Bhd group president and CEO Datuk Khairussaleh Ramli; and head of the Cardiology Department at the National Heart Institute (IJN) Datuk Dr Azmee Mohd Ghazi were also among the SSAP award recipients. Other SSAP recipients were And Co. chairman Datuk Dr H.C Harald Link, Prima Merdu Sdn Bhd chairman and executive director Datuk Amer Hamzah Ahmad; Tong Chun Development Sdn Bhd managing director Datuk Ken Ng Chee Kean; and Magma Group Berhad Group managing director Datuk Liang Chee Fong. The Darjah Sri Indera Mahkota Pahang (SIMP), which carries the title Datuk Indera, was conferred on three individuals, namely Pahang Finance officer Datuk Fadzilla Salleh, former chairman of the Police Family Association (Perkep) Puan Sri Zainah Othman, and director-general of the Department of National Unity and Integration Datuk Che Roslan Che Daud. Pahang mufti Profesor Datuk Dr Asmadi Mohamed Naim was the sole recipient of the Darjah Al-Sultan Abdullah Ahmad Shah (DSAS), which carries the title Datuk. Eight individuals received the Darjah Sultan Ahmad Shah Pahang (DSAP), which also carries the title Datuk. They included Pahang Legal advisor Muhammad Saifuddin Hashim Musaimi; Pahang Land and Mines director Datuk Razihan Adzharuddin; Deputy State secretary (Development) Datuk Ali Syahbana Sabaruddin; and Commander of Air Region 2, Air Region 2 Headquarters, Labuan, Major General Datuk Norli Hisham Alwi. Also receiving the DSAP award were Comptroller of the Royal Household of the Sultan of Pahang Major General Dato' Mohamed Zahari Yahya, fashion designer and founder of Radzuan Radziwill Boutique Datuk Radzuan Radzi; Jaxer Sdn Bhd founder and executive director Mohd Faizal Abdullah; and Sendayu Tinggi Holdings Sdn Bhd director-general Mohamad Zaidi Aziz. The Darjah Indera Mahkota Pahang (DIMP), which carries the title Datuk, was awarded to 26 individuals, including Malaysian Anti-Corruption Commission Intelligence Division senior director Datuk Saiful Ezral Arifin and Universiti Islam Selangor (UIS) vice-chancellor Professor Datuk Dr Mohd Farid Ravi Abdullah. Other recipients included Malaysian Ambassador to Lebanon Azri Mat Yacob, Pahang JBPM director Mohd Razam Taja Rahim, MOH Human Resources Division secretary Noor Azman Abdul Rahman, and Sabah Public Works Department deputy director of Works Mohd Shamsul Nizam Abdul Wahid. Also conferred the DIMP were Defence Attaché at the Malaysian Embassy in Jakarta Brigadier General Azrin Iskandar Zulkaply; director-general of the Defence Operations Branch, Defence Operations and Training Division, Brigadier General Mohd Rafi Muhammad; commander of the Air Defence Artillery Group Brigadier General Azhar Mustapha; and chief of staff of the Eastern Sabah Security Command (ESSCOM) Air Operations Division Brigadier General Ivan John Row. At the ceremony, Al-Sultan Abdullah also conferred the Ahli Mahkota Pahang (AMP) award on four individuals, including DSP Nik Mohammed Syukry Nik Husain, who serves as police escort to the 6th prime minister, and Pahang Umno Youth vice-chief Wan Azam Wan Rosdy. Earlier, the ceremony began with a 21-gun salute following the playing of the state anthem, Allah Selamatkan Sultan Kami. –Bernama
The Star
11 hours ago
- The Star
Gua group aims to bring legacy restaurants from small-towns in Malaysia to KL
It is 11am at Kedai Kopi Xiong Wor in Taman Tun Dr Ismail in Kuala Lumpur and tables are heaving with customers. By 12pm, every single available table is taken up and the eatery's signature curry noodles are precariously close to being sold out – as is often the case. What is interesting is that this scenario is a replication of what usually happens on a daily basis in the original outlet in Kuantan, named Teng Haw Coffee Shop (its name in Hainanese). Teng Haw was established in 1966 and is named after the patriarch of the family who first started it 59 years ago. For many Klang Valley denizens who call Kuantan their hometown, the curry noodles at Teng Haw are a must-have on a trip back home and consequently, one of the dishes they miss the most when they're back in Kuala Lumpur. Thankfully a few months ago, a fledgling restaurant group called Gua Group successfully convinced Jayden Ong, the fourth-generation owner of the restaurant, to bring the brand to Kuala Lumpur, where it now sits under the banner of Kedai Kopi Xiong Wor, its Cantonese name. What is even more interesting is that Gua Group's founders – Danial Yik, his sister Mimi Yik and brother-in-law Keanu Subba – are entirely focused on identifying and bringing heritage restaurants scattered throughout the country to the capital city. From left: Keanu, Mimi and Danial are on a mission to preserve heritage restaurants and recipes by providing an opportunity for younger-generation owners to open branches in KL. — SAMUEL ONG/The Star 'I had this thought of 'Isn't it a bit strange that you always have to tell your friend to go to Penang for the best char kuey teow or to Ipoh for chicken rice'? 'So the three of us had a discussion, and we thought, why don't we bring these heritage brands that are tried and tested and have a legacy to the Klang Valley? People love these foods, so why not have the same experience in KL?' says Danial. From those tenuous beginnings rose the kernel of an idea for Gua Group's core mission of building a repertoire of legacy restaurants in the Klang Valley. Driving tradition forward While Danial, Mimi and Keanu are relatively new to the F&B industry, they are not entirely untested, having established a healthy food eatery called Staple Eats just before the start of the Covid-19 pandemic. The three come from diverse backgrounds – Danial studied architecture at the University of Melbourne but left before completing his degree, while Mimi is a political science major. Her husband, Keanu, meanwhile, is a former champion Malaysian mixed martial artist. It was always Mimi's dream to open a restaurant, so Staple Eats became the family's first F&B venture. When the restaurant closed after the end of the Covid-19 pandemic, the trio realised that the dishes that resonated most with Malaysians were Malaysian food, especially traditional foods that are still made the old-fashioned way. 'A lot of these legacy foods are disappearing. We wanted to keep the legacy alive. I wouldn't say we are like custodians – I don't want to be too presumptuous but I would say that we want to have a hand in preserving local favourites that would be lost to time otherwise,' says Danial. Danial (right) says it was easy to convince Ong to come onboard, and the success of Xiong Wor has shown him that there is a gap in the market for heritage restaurants in KL. — SAMUEL ONG/The Star Part of this impetus was also prompted by the number of heritage restaurants dying out as younger generations are either not motivated to continue the business or have been encouraged by their parents to pursue other less physically laborious paths. 'There is a need for preservation of these dishes and there is a gap in the market to draw more of these heritage restaurants to KL and potentially expand their presence. Like with Jayden, for example, he was actually a mechanic before this as his family wasn't keen on him being in the business. 'So if he decided that he didn't want to continue making the curry mee, we won't be able to enjoy it anymore – nearly 60 years of culinary legacy would end with him. And you find this more and more with like famous chicken rice shops in Ipoh suddenly closing because the owner's son or daughter went overseas,' says Danial. Maiden venture Having discovered their true calling, Gua Group's founders wasted little time in recruiting their first heritage restaurant, setting their sights on a hometown favourite that they grew up with. 'Kuantan is my father's hometown, so I've been going to Teng Haw since I was a toddler. Every trip to Kuantan, we always woke up early to go there. 'It was part of the experience, you know. It was not just about going and eating the food – you also had to wait in line and hope it wasn't sold out,' says Danial. Xiong Wor's curry mee boasts nearly 60 years of fine-tuning and is the key reason Gua Group wanted to bring the heritage restaurant to KL. The process of getting Ong on board was relatively simple and fuss-free. 'Our negotiation was very simple. I said, 'Do you want to open your shop in KL?' He said, 'Yes'.' Once Ong agreed, everything else fell into place relatively quickly. Danial's father believed in his children's vision and invested in the restaurant group and having learnt their lessons with their first F&B venture, it took Danial and his team only three months to put together Kedai Kopi Xiong Wor. 'We were working with Jayden, who is the same age as us and knows his job very well and we had operated kitchens before, so we were very quick to identify what we needed,' says Danial. But turning an age-old restaurant in Kuantan into a city staple was not without its challenges. Even though everything came together quickly, the hurdles and obstacles were presented in different packages. 'The translation from a kopitiam to a restaurant with a different set of cleanliness standards and preparation standards was one of the challenges we faced. 'We wanted to make the restaurant more modern but we also wanted it to be safe and clean, because we find that a lot of kopitiams have been operating for so long that they don't want to change. But luckily, Jayden has been very open to change,' says Danial. Since it opened a few months ago, the restaurant has been perpetually packed. — SAMUEL ONG/The Star Gua Group's business operates on a profit-sharing model. Danial and his team finance the expansion of heritage restaurants like Xiong Wor in KL as well as provide consultancy services. They don't own or buy the recipes from the owners, so the recipes remain with their rightful keepers. 'We don't buy their recipes – they still hold them. What we do is actually empower this new generation of restaurant owners and provide them with a platform or a way for them to see that they can continue with the next generation and preserve these dishes,' explains Danial. Eyes on the future Having established their first heritage restaurant in the Klang Valley, Danial now knows that this model is very viable. 'The success of Xiong Wor has enabled us to confidently continue with this mission because now we know that our model does work. And we can use the first restaurant to convince other businesses who want to continue their legacy and heritage that there is a way to make money and beyond that, to continue the traditional format in a sustainable way,' says Danial. Identifying new heritage restaurants to work with will depend on a few key factors: how good the food is, how passionate the owners are, and the most pertinent part of this equation – is there someone in the younger generation who is hungry for growth and an opportunity like this? Kaya toast is one of the old-school dishes at Kedai Kopi Xiong Wor. — SAMUEL ONG/The Star 'The next restaurants we are looking at are places in Ipoh and Penang. But for this to work, we need to see that the owners believe in the mission, which is to preserve the legacy and heritage. If they're running a family restaurant just for the sake of doing it, we probably wouldn't choose them. 'We're looking for people who inject love into their recipes and most importantly, we require someone from the restaurant to be very active in continuing the mission,' he says. To finance the expansion of these heritage Malaysian restaurants, Danial says Gua Group has to grow more organically. Next in their pipeline is a legacy international restaurant, which the group will be establishing in Kuala Lumpur. 'The international branding is more of an expansion effort. So we need to bring in a bit more income generation so that we can focus on financing our actual mission of bringing in more heritage Malaysian restaurants to KL,' says Danial. As Danial himself is Muslim (his father is Chinese and his mother is Malay), part of his core goal is also to introduce heritage restaurants that are more inclusive and cater to all Malaysians. 'We want to make these restaurants pork-free and alcohol- free because, from a business standpoint, we will miss out on a whole demographic of Malaysians if we don't do this. And the idea is to bring these heritage foods to a wider audience,' says Danial.
The Star
12 hours ago
- The Star
The RM2.5bil giveaway that Malaysia cannot afford
When Prime Minister Datuk Seri Anwar Ibrahim delivered his 'Penghargaan Untuk Rakyat' speech on 23 July 2025, he painted a confident picture of Malaysia's economic trajectory. Growth stood at 4.4% for the first quarter of 2025 with expectations of 4.5% in the second. The ringgit had strengthened against the US dollar, climbing to RM4.23/USD. Malaysia rose by 11 spots to 23rd place in the World Competitiveness Index and total approved investments reached a record RM384bil last year. However, beyond the headline figures lies a more complex and fragile reality. Analysts have pointed out that Q1 growth underperformed market expectations. Exports remain uneven. Domestic consumption is cooling and Bank Negara's recent rate cut reflects the underlying weakness that persists despite upbeat official messaging.
