KUALA LUMPUR, March 8 — Maybank Investment Bank (Maybank IB) expects net interest margins (NIMs) to flatten or slightly contract in 2022 amid a slower current account saving account (CASA) growth and increased deposit competition.

The investment bank expects the banking sector’s operating profit growth to be muted in 2022, having conservatively factored in lower non-interest income from further marked-to-market investment losses as bond yields rise, and slightly faster expense growth.

"We expect higher tax under Cukai Makmur (the prosperity tax) to offset lower credit costs and project a slight 1.0 per cent contraction in cumulative core net profit. Positively though, dividend payout ratios are normalising with upside surprises if they return to pre-Covid levels,” the bank said in a research note today.

Maybank IB said investors should look to 2023, where it projects an 18 per cent net profit rebound on lower provisions and the absence of Cukai Makmur.

"Excluding the impact of Cukai Makmur, we expect cumulative core net profit to expand 7.0 per cent in 2022 and 8.0 per cent in 2023.

"There is room for upside surprises should interest rates rise further (we impute only one rate hike in the fourth quarter of 2022), and/or credit costs (which we have kept elevated) fall much faster,” it added.

The investment bank expects a return on average equity (ROAE) to bounce back to 10.2 per cent in 2023 from 9.1 per cent in 2022 and 9.6 per cent in 2021. — Bernama