MY Morning Wrap | Telekom Malaysia Awarded RM1.25 Billion Contract for New Emergency Call System

UOB has expressed its commitment to continue collaborating with the Johor government to drive investment and trade into Malaysia following the establishment of the Johor-Singapore special economic zone (SEZ). UOB Malaysia CEO Ng Wei Wei made the statement after meeting with Johor Menteri Besar Datuk Onn Hafiz Ghazi at the bank's headquarters in Singapore, where he attended a roundtable discussion with regional business leaders. Onn Hafiz's visit was part of UOB's efforts to strengthen collaboration initiatives under the SEZ that aims to boost cross-border economic connectivity between Singapore and Malaysia. UOB has been in Malaysia since 1951 and has 55 branches across the country, seven of them in Johor. In the last two years, UOB's foreign direct investment advisory unit facilitated the expansion of more than 20 companies into Johor.

Malaysia's growth momentum is expected to remain strong in the near term, driven by rising domestic and external demand, according to MIDF Research. The research house maintains its projection that Malaysia's economy will grow at 4.7% this year, up from 3.6% in 2023. Malaysia's Leading Index increased by 4.3% year-on-year in April 2024, marking the steepest rise since July 2022, driven by improvements in all components except real imports of semiconductors. The Coincident Index also increased by 3% year-on-year, the fastest growth in three months, due to another double-digit expansion in real Employees Provident Fund contributions. However, the research house remains cautious about potential downside risks, such as a slowdown in major economies, worsening geopolitical and trade tensions, and disruptions to global supply chains and trade flow.

Investment analysts predict that Malaysia's banking sector will continue its upward momentum, driven by ongoing loan growth, stabilizing net interest margin (NIM), and potential higher net interest income (NII). Kenanga Research notes that the banking sector will likely benefit from ongoing loan growth and improved gross domestic product (GDP) along with better margin retention. TA Securities Research highlights downside risks for the sector, including a decline in asset quality due to concerns over rising inflationary pressures, external shocks, weaker contributions from overseas operations, and high overhead expenses. Despite these risks, the sector's outlook remains positive, supported by strong performance indicators and growth prospects. May 2024's data showed bank loans growth at 5.8% year-on-year (y-o-y), driven by the household segment, with loans for the purchase of cars and mortgages. Meanwhile, business loans grew at 4.8% y-o-y. The research houses have maintained their 2024 loan growth forecasts, with TA Securities projecting the highest at 6.1%.