Malaysia – Banking

Overview :-

The Malaysian commercial banking sector has remained resilient, backed by strong capital and stable funding levels. The sector’s Basel III liquidity coverage ratio (LCR) stood at 125% as at end-January 2016 – higher than the final requirement of 100%. Meanwhile, the industry’s ample liquidity and capital buffers are reflected by the common-equity tier- 1 capital ratio, tier-1 capital ratio and total capital ratio which stood at 13.0%, 13.9% and 16.6% respectively. The level of net impaired loans also remained low at 1.1% during the same period.

As the financial technology (FinTech) driven movement gains momentum, commercial banks are monitoring the evolution of this emerging ecosystem closely and are actively pursuing opportunities to play an integral part in it. Banks recognise that they have much to gain from FinTech’s innovations. Soon, many FinTech driven offerings may become pivotal elements in banks’ operating models, enabling banks to reduce costs, reach underserved markets and open up new products and revenue streams. To achieve this, a FinTech ecosystem needs to be embedded into the banks’ transformation strategies to drive change across the organisation – people, processes and technologies.

Over the past year, more local banks are expanding their operations into China and other ASEAN markets as greater intra-ASEAN trade and investment have encouraged more banks to create a bigger presence regionally to better serve their clients. As ASEAN economies mature, this will result in higher demand for more sophisticated financial products, thus providing ample opportunities and incentive for banks.

Types Of Banking In Malaysia

The following types of banking institutions are prevalent in Malaysia:

A)   Conventional Banking

Conventional banking is the conduct of banking as per the laws and regulations that govern banking in a country. In Malaysia, conventional banking is supervised by the Central Bank of Malaysia, Bank Negara Malaysia by the powers vested in it through the Central Bank of Malaysia Act 2009.

Conventional banks in Malaysia are required to comply with the provisions under the Financial Services Act, 2013. Currently there are 27 commercial banks in Malaysia who offer retail banking services.

List of Malaysian Commercial banks

·         Affin Bank Berhad

·         Alliance Bank Malaysia Berhad

·         AmBank (M) Berhad

·         CIMB Bank Berhad

·         Hong Leong Bank Berhad

·         Malayan Banking Berhad

·         Public Bank Berhad

·         RHB Bank Berhad

List of Foreign Commercial Banks

·         BNP Paribas Malaysia Berhad

·         Bangkok Bank Berhad

·         Bank of America Malaysia Berhad

·         Bank of China (Malaysia) Berhad

·         Bank of Tokyo-Mitsubishi UFJ (Malaysia) Berhad

·         China Construction Bank

·         Citibank Berhad

·         Deutsche Bank (Malaysia) Berhad

·         HSBC Bank Malaysia Berhad

·         India International Bank (Malaysia) Berhad

·         Industrial and Commercial Bank of China (Malaysia) Berhad

·         J.P. Morgan Chase Bank Berhad

·         Mizuho Bank (Malaysia) Berhad

·         National Bank of Abu Dhabi Malaysia Berhad

·         OCBC Bank (Malaysia) Berhad

·         Standard Chartered Bank Malaysia Berhad

·         Sumitomo Mitsui Banking Corporation Malaysia Berhad

·         The Bank of Nova Scotia Berhad

·         The Royal Bank of Scotland Berhad 

B)   Islamic Banking

Islamic banking refers to a system of banking that complies with Islamic law also known as Shariah law. In Malaysia, Islamic banks are supervised by Bank Negara Malaysia and have to comply with the provisions given in the Islamic Financial Services Act, 2013. Currently, in Malaysia, there are 18 Islamic and 5 international Islamic banks. And, a number of other banks operate through Islamic banking “windows”.

Islamic banks

·         Affin Islamic Bank Berhad

·         Al Rajhi Bank

·         Alkhair International Islamic Bank Malaysia Berhad

·         Alliance Islamic Bank Berhad

·         AmIslamic Bank Berhad

·         Asian Finance Bank (M) Berhad

·         Asia Offshore Finance Agency

·         Bank Islam Malaysia

·         Bank Muamalat Malaysia

·         CIMB Islamic Bank Berhad

·         Hong Leong Islamic Banking Berhad

·         HSBC Amanah Malaysia Berhad

·         Kuwait Finance House (Malaysia) Berhad

·         Maybank Islamic Berhad

·         OCBC Al-Amin Bank Berhad

·         Public Islamic Bank Berhad

·         RHB Islamic Bank Berhad

·         Standard Chartered Saadiq Berhad

C)   Investment Banking

Unlike commercial banks which focus on providing retail credit and loan facilities, investment or merchant banks provide more sophisticated and complex banking facilities like raising capital by way of syndication, corporate financial advisory services, management of investment portfolios, listing of public companies, underwriting of new issues of shares, mergers and acquisitions and the restructuring of companies, especially those under Section 176 of the Companies Act, 1965.

14 investment banks currently operate in Malaysia. Investment banks are supervised both by Bank Negara and the Securities Commission.

Investment Banks

·         Affin Hwang Capital (Following merger between Affin Investment Bank and Hwang-DBS Investment Bank)

·         Alliance Investment Bank Berhad

·         AmInvestment Bank Berhad

·         CIMB Investment Bank Berhad (Partnered with BDO Uni-bank as Authorized Agent Bank For International Tax Collection)

·         Hong Leong Investment Bank Berhad

·         Public Investment Bank Berhad

·         RHB Investment Bank Berhad

·         KAF Investment Bank Berhad

·         Kenanga Investment Bank Berhad

·         Maybank Investment Bank

·         MIDF Investment Bank Berhad

·         MIMB Investment Bank Berhad (merged with Hong Leong Investment Bank)

·         OSK Investment Bank Berhad (merged with RHB Investment Bank Berhad)

·         ECM Libra Investment Bank Berhad (bought over by Kenanga Investment Bank

·         Offshore Banking

Malaysia also offers offshore / international investment, banking and financial services through the offshore financial hub, the Labuan International Business and Finance Centre (IBFC) which comes under the purview and supervision of the Labuan Financial Services Authority (Labuan FSA; formerly known as Labuan Offshore Financial Services Authority — LOFSA).

Top largest banks in Malaysia by terms of Total assets