Malayan Banking Bhd (MAYBANK) Faces Rising Funding Costs Amid a Depressed Bank‑Sector Sentiment

Malayan Banking Bhd (MAYBANK) continues to demonstrate its resilience as the Malaysian banking sector contends with a tightening wholesale funding market and heightened deposit competition. The bank’s recent trading session, with a closing price of MYR 9.97 on 5 October 2026, sits comfortably within its 52‑week range (high MYR 12.42; low MYR 9.83) and reflects a valuation of approximately 11.5 × earnings. With a market cap of MYR 120.95 billion, the bank remains a cornerstone of Malaysia’s financial sector.

1. Wholesale Funding Pressures

Bloomberg research has warned that the 3‑month interbank loan rate (KLIBOR) has climbed from 3.28 % at the start of the year to 3.55 % by 6 October, a 27‑basis‑point rise in just over nine months. This surge in wholesale rates translates into higher funding costs for banks that rely on interbank borrowing, tightening the spread between borrowing and lending rates. Even if the central bank maintains its policy stance, banks will still confront a dual burden: the need to attract deposits amid fierce competition and the erosion of net interest margins caused by rising funding costs.

2. Deposit Competition and Asset Quality

Bank deposits have grown at an annualised 5.2 % pace in August, with term deposits up 1.5 % over July. The continued inflow of funds suggests that banks still find deposit capture attractive, but the cost of these deposits is rising as consumers shift to higher‑yield term products. In the broader market, foreign investors have intensified selling of Malaysian equities, contributing to a 2.44 % week‑on‑week decline in the KLCI. Local institutions and retail investors have increased buying, but the overall sentiment remains subdued, leading to a new intra‑year low for bank shares.

3. Malayan Banking’s Strategic Position

Against this backdrop, Malayan Banking’s relatively lower deposit costs provide a competitive edge. Its diversified footprint—serving retail, corporate, and institutional clients across Malaysia, Singapore, Indonesia, and other international markets—offers a buffer against domestic market volatility. Moreover, the bank’s occupancy of office space at the Merdeka 118 development further strengthens its asset‑quality profile. Approximately 40 % of the 160 000 sq ft net rentable area has been leased to MAYBANK itself, with the remainder leased to the parent PNB and other tenants. The lease arrangement, structured as a triple‑net, reduces exposure to vacancy risk and contributes to a projected 90 % occupancy over the next five years, translating into a recurring real‑estate income of MYR 1.37 billion annually.

4. Forward‑Looking Outlook

Malayan Banking’s current price‑earnings multiple of 11.54 implies that the market anticipates a modest earnings growth trajectory in the face of tighter margins. The bank’s strategic focus on digital transformation and tokenisation—an emerging trend in the sector—positions it to capture new revenue streams while improving operational efficiency. Analysts expect the bank to sustain its asset‑quality metrics, buoyed by prudent risk management and a robust balance sheet.

In summary, while the Malaysian banking sector grapples with rising wholesale rates and a bearish market sentiment, Malayan Banking Bhd’s cost‑effective funding base, diversified client portfolio, and strategic real‑estate positioning provide a solid foundation for continued resilience and incremental value creation.