Banks have built up strong loss absorption buffers since the pandemic started. The GIL coverage of the eight banks was a solid 132% as at end-2022 .
“Some management overlay writebacks may be seen this year, though the quantum will be subject to banks’ judicious assessment of the operating environment. Some banks have already factored in partial overlay writebacks in their credit cost guidance for the year,” Lee noted. Commenting on digital banks, Lee said the experience in other markets has shown that the road to profitability and sustainable growth for digital banks is not easy.
“Each of the five consortiums which have been awarded digital banking licences last year has an existing captive ecosystem it can leverage on. “Fundamental differences observed in the business and balance sheet profiles of commercial banks in Malaysia anchor our view.
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