Page 43 - Bank-Muamalat_Annual-Report-2023

ANNUAL REPORT 2023
OUR STRATEGY

BANKING SECTOR OUTLOOK
Implications for Bank Muamalat
Malaysia’s banking sector continues to remain resilient despite having to contend
with bouts of economic uncertainties. However, intense competition has prompted
In navigating this challenging
banks to innovate and prioritise customer experience, especially in the digital
environment, Bank Muamalat
realm, to meet emerging demands for greater ease and connectivity. Changing
should remain vigilant of
demographic profiles and increasingly tech savvy Malaysian households within the
external factors impacting
digital space warrants for a seamless customer experience.
economic growth and trade.
Opportunities lie in supporting
Although economic challenges persist, banking institutions still managed to
sectors experiencing growth, such
achieve a 5.3% growth in financing books, albeit slower than the previous year’s
as technology, while managing
5.7%. The sector maintained superior asset quality, as evidenced by the decline
risks associated with geopolitical
in the Gross Impaired Financing Ratio (GIFR) from 1.72% in the previous year to
tensions and global economic
1.65% in 2023.
uncertainties. Additionally,
Furthermore, banks remained well-capitalised, with Common Equity Tier-1 (CET1) government policies, economic
and Total Capital Ratio (TCR) comfortably above regulatory minimum standards at strategies and growing demand
14.9% and 18.6% respectively. Liquidity coverage also improved, with the Liquidity for digital transactions are shaping
Coverage Ratio (LCR) rising to 160.9% by December 2023 from 151.5% the Bank’s readiness to capitalise
at the end of 2022. All this indicates that banking institutions were able to play on emerging opportunities
their significant role as financial intermediaries between the customers and the and contribute to Malaysia’s
depositors effectively despite the heightened economic uncertainties. sustainable economic
development.
Looking ahead, the banking sector is expected to continue driving economic
growth, with sustainable financing growth projected at 5.5% in 2024. However,
the industry landscape will evolve with the emergence of digital banks, reshaping
customer expectations for seamless service that complies with regulatory
requirements. This dynamic is likely to prompt traditional players to invest in
enhancing their digital presence to compete effectively in the evolving market.

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