This is because in a bad economy, businesses will not be borrowing too much for expansion. Banks will also be really selective as they do not want their Non-Performing Loans (NPLs) to go up due to some borrowers being unable to service their debts.
There’s also talk about the P2P taking businesses away from the banks.
Frankly, this is still way too early to tell. Even in advanced economies, conventional banks remain much larger than any other alternative fundings.
In an article “Banks stay on positive path after maintaining growth in 3Q18” in TheMalaysianReserve, it was reported that six of Malaysia’s eighth-largest banking groups posted higher earnings during the quarter except for Malayan Banking Bhd (Maybank).
Public Bank Bhd meanwhile recorded a higher net profit a year ago due to a one-off gain.
AmInvestment Bank Bhd analyst and senior VP of domestic equity, Kelvin Ong said, “There was a slight slowdown on topline growth, but profits are tracking within expectations. Non-interest income (NII) was affected by market activities, and the trend was seen not just at Maybank, but at other large banks as well. We were expecting NII to be weaker because of market volatility.”
Some results:
• Maybank’s net profit slipped 3.4% to RM1.96 billion in 3Q18 from RM2.03 billion last year.
• CIMB Group Holdings Bhd recorded a 4.4% rise in earnings to RM1.18 billion in 3Q18, from RM1.13 billion a year earlier.
• Public Bank’s 3Q18 earnings declined 1.4% to RM1.38 billion from RM1.4 billion a year ago.
• RHB Bank Bhd’s net profit jumped 18.4% to RM578.69 million in 3Q18 from RM488.83 million previously.
• Hong Leong Bank Bhd posted double-digit growth in net profit for 3Q18, with earnings up 10.6% to RM706.92 million from RM638.97 million previously.
• AMMB Holdings Bhd’s (AmBank) net profit climbed 5% to RM348.15 million in its second quarter ended Sept 30, 2018 (2Q19), from RM331.47 million last year.
• Alliance Bank Bhd’s earnings jumped 14.4% to RM140.52 million in its 2Q19 from RM122.8 million last year, its highest quarterly net profit in three years, on stronger net income.
• Affin Bank Bhd, the smallest of the eight players, saw net profit rise more than threefold to RM144.56 million in 3Q18 from RM39.9 million last year.
Always note the banks’ profits because it is a barometer of the country’s economic health. This is a good report card because it comes out every three months.
NPL will always be one important sign of a potential property bubble burst. Here’s that earlier article.
Remember the 1998 crisis? It was not a happy time for banks. When the economy continues to grow, the most competitive bank will earn more and well, the tide lifts all boats.
This article first appeared in kopiandproperty.com
Charles Tan blogs at property investment site kopiandproperty. He dislikes property speculators and disagrees that renting is better than buying. He thinks it’s either property or poverty. He is presently the CEO of an auction house auctioning assets beyond just properties.