Malaysia
Banking sector profile — Asia-Pacific
Data as of October 2026 • TGB Intelligence Unit
Policy rate as of 7 October 2026: 2.75% (source: Bank Negara Malaysia)
Banking sector at a glance
Structure and performance
Malaysia operates a dual banking system in which conventional and Islamic banks work under parallel legislation. Banking-system assets reached RM4.01tn at end-July 2026, about twice GDP, held by 24 licensed commercial banks, 16 Islamic banks, 10 investment banks, five digital banks and one international Islamic bank. Islamic banks accounted for a third of assets and 43% of loans, a measure that excludes the Islamic windows operated by 16 other institutions. Foreign-owned banks held 18% of assets, and the market is led by the Maybank, CIMB and Public Bank groups.
Lending is weighted towards households and property. Residential property loans totalled RM922bn in July 2026, 38% of banking-system loans, and residential and non-residential property together accounted for about half. Funding is deposit-led: the loan-to-fund ratio was 82.7% and the liquidity coverage ratio 148.7%. Credit to the private non-financial sector grew 6.5% year on year in July 2026, with business loans up 7.5%, driven by working capital, and household loans up 5.3%. Outstanding SME financing grew 5.9% in 2025.
Asset quality and capital are sound. Gross impaired loans were 1.43% and net impaired loans 0.95% of financing in July 2026, while Stage 2 loans amounted to about 6% of the total. Return on equity for deposit takers was about 10.8% in the fourth quarter of 2025, according to IMF Financial Soundness Indicators. BNM's Financial Stability Review for the second half of 2025, published in March 2026, described financial institutions as well capitalised with ample liquidity buffers, and its macro solvency stress tests as affirming resilience to severe shocks.
The economy provides a supportive backdrop. Growth reached 5.2% in 2025 and 5.7% in the first half of 2026 on strong electrical and electronics exports and data-centre investment, while headline inflation was 1.8% in July 2026, allowing BNM to hold the OPR at 2.75%. The main domestic sensitivities are property exposure and household debt service; externally, BNM has flagged tariff uncertainty and the Middle East conflict. Benchmark reform, with KLIBOR giving way to MYOR and MYOR-i, requires legacy KLIBOR contracts to be converted by June 2028.
Structural trends
The shifts shaping banking in Malaysia.
Islamic banking depth: Islamic banks held RM1.33tn, a third of banking-system assets, and 43% of loans in July 2026, excluding Islamic windows at conventional banks.
Benchmark reform: banks must be ready to offer MYOR- and MYOR-i-referenced products by 1 October 2026; KLIBOR ceases for new trades from July 2027 and ends on 1 January 2029.
Digital entrants: five digital banks – GX Bank, Boost Bank, YTL Digital Bank (Ryt Bank), AEON Bank and KAF Digital Bank – held licences in September 2026, two of them Islamic.
Steady credit growth: credit to the private non-financial sector grew 6.5% year on year in July 2026, led by business loans at 7.5%, with household loans at 5.3%.
Leading institutions
Largest banks in Malaysia by total assets.
| # | Bank | Total assets (US$) | Type |
|---|---|---|---|
| 1 | Maybank | US$259.8bn | Universal |
| 2 | CIMB Group | US$192.1bn | Universal |
| 3 | Public Bank | US$138.5bn | Commercial |
| 4 | RHB Bank | US$88.3bn | Universal |
| 5 | Hong Leong Financial Group | US$84.2bn | Universal |
| 6 | AmBank Group | US$51.5bn | Universal |
| 7 | UOB MalaysiaSubsidiary of UOB | US$40.3bn | Commercial |
| 8 | Affin Bank | US$30.6bn | Universal |
Largest banks in Malaysia by total assets, FY2025 audited accounts. Domestic groups as in the TGB Bank Rankings; other domestic banks from their own audited accounts; subsidiaries of foreign groups shown with their own accounts and marked. Not a ranking table. Converted at official central-bank rates for each fiscal year-end.
Supervision and capital rules
Bank Negara Malaysia licenses and supervises conventional banks under the Financial Services Act 2013 and Islamic banks under the Islamic Financial Services Act 2013, supported by its Shariah Advisory Council. Capital requirements follow Basel III through BNM's Capital Adequacy Framework and its equivalent for Islamic banks, and banks are subject to the liquidity coverage ratio. Perbadanan Insurans Deposit Malaysia insures deposits up to RM250,000 per depositor per member bank and, with BNM, determines non-viability triggers for Basel III capital instruments. Recent reforms include enactment of the Consumer Credit Act and revisions to the Hire-Purchase Act, noted by BNM in March 2026, and the transition from KLIBOR to MYOR and MYOR-i, under which KLIBOR ceases on 1 January 2029.
What changed in 2026
- March 2026: BNM's Annual Report 2025 and Financial Stability Review reported 5.2% growth in 2025, described banks as well capitalised and projected growth of 4–5% in 2026.
- August 2026: BNM data showed credit to the private non-financial sector up 6.5% year on year in July, with the banking system's liquidity coverage ratio at 148.7%.
- September 2026: The Monetary Policy Committee held the OPR at 2.75% on 3 September, its level since July 2025, after first-half growth of 5.7%.
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