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KUALA LUMPUR: Another decent reporting season for the banking sector is expected by end of this year, according to Maybank Investment Bank (Maybank IB).

The research firm expects core net profit in the sector to expand at a faster rate of 7.8 per cent year-on-year relative to operating profit, in the absence of bond impairment provisions, mitigated by higher credit costs as a result of MFRS9 compliance.

Looking to 2018, Maybank IB forecasts a moderation in operating profit growth to 5.4 per cent from 9.4 per cent in 2017, as faster domestic loan growth and prevailing positive JAWS are offset in part by more modest net interest margin expansion and non-interest income growth.

After three consecutive years of non-growth, 2017 provided relief as cumulate core net profit for Maybank IB’s bank stock coverage jumped 15 per cent YoY.

Cumulative operating profit rose nine per cent YoY, supported by an average net interest margin expansion of five basis points YoY (flat YoY in 2016), which more than compensated for sluggish loan (domestic & foreign) growth of just about two per cent in 2017.

That aside, non-interest income growth of six per cent YoY and positive JAWS contributed to the growth, while lower credit costs gave rise to the 15 per cent YoY bounce in net profit.

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