Malaysian Banks Show Resilience in Q2 Despite Higher Provisions

Malaysian banks are expected to remain resilient in H2 2025, despite a projected quarter-on-quarter rise in loan loss provisions in Q2, according to CGS International Research. The Malaysian banks Q2 resilience is supported by stable fundamentals, with the increase in provisions largely due to the absence of a prior one-off write-back by Hong Leong Bank. Charge-off rates remain low at approximately 15 basis points, suggesting no immediate credit concerns. Industry loan growth slowed slightly to 5.1% in June, but asset quality improved after a brief increase in impaired loans. CGSI maintains an “overweight” rating for the sector, forecasting potential dividend upside and steady performance into the second half.