Page 39 - Bank Muamalat_AR24

ANNUAL REPORT 2024 1 2 3 Our Strategy 4 5 6 7 8 37

MALAYSIAN BANKING SECTOR 2024
Industry Financing Industry Gross Impaired Average CET1 Average Average
Growth: Financing Ratio: ratio: TCR: LCR:
1.2 0.18 14.7% 18.3% 151.7%

percentage points percentage points

Banking Sector Outlook – Local and Regional
In 2024, Malaysia’s banking sector built on its robust Digital transformation emerged as a critical theme in 2024.
fundamentals and demonstrated heightened resilience Intense competition from emerging digital banks and fintech
amid evolving economic and technological dynamics. The players compelled traditional institutions to accelerate
sector achieved a financing book growth of approximately investments in digital platforms. This transition not only
5.9% (2023: 4.7%), buoyed by sustained demand from both enhanced operational efficiency but also delivered a more
retail and corporate segments. This growth was supported seamless and personalised customer experience, especially
by an expanding SME lending portfolio and a steady uptake for Malaysia’s increasingly tech-savvy and digitally connected
in digital financing channels, reflecting a strategic shift demographic. Banks’ strategic initiatives to upgrade their
towards technology-driven customer engagement. digital infrastructure have started to yield benefits in terms
of improved service delivery and customer retention.
Asset quality continued to improve in 2024, with the
Gross Impaired Financing Ratio (GIFR) declining to around Across the region, banking sectors have shown considerable
1.44% (2023: 1.62%), indicating stronger risk management resilience against a backdrop of varied economic conditions
practices across banks. Capital strength remained a key and persistent global uncertainties. In key markets such as
pillar of stability, as banks reported an average Common Singapore, Indonesia, and Thailand, banks have recorded
Equity Tier-1 (CET1) ratio of 14.7% (2023: 14.9%) and steady credit growth and maintained robust asset quality,
a Total Capital Ratio (TCR) of approximately 18.3% (2023: supported by strong capital buffers and disciplined risk
18.6%), well above regulatory minimums. Meanwhile, management.
liquidity positions were further bolstered, with the Liquidity
Coverage Ratio (LCR) averaging 151.7% (2023: 152.2%) The ongoing digital revolution is reshaping the competitive
by year-end–an outcome of prudent liquidity management landscape regionally. Financial institutions are not only
and a stable, diversified deposit base. enhancing their digital channels but also forging strategic
partnerships with fintech firms to expand their service
offerings. This trend is particularly pronounced in markets
where regulatory frameworks are evolving to support
innovation, thereby broadening financial inclusion and
driving customer-centric solutions.

Islamic Finance

The Islamic finance industry continued to grow, supported by regulatory enhancements and rising demand for
Shariah-compliant financial solutions, while digital transformation and fintech adoption reshaped customer expectations.
Despite global financial market volatility, exchange rate fluctuations, and geopolitical risks, Malaysia’s stable economic
fundamentals sustained financing demand, particularly in SME, renewable energy, and halal economy sectors.