KUALA LUMPUR (Feb 14): IHS Markit expects the Malaysian banking sector’s aggregate dividends to increase by 26% year-on-year (y-o-y) to US$3.43 billion (about RM14.37 billion) for financial year 2021 (FY21) after a 27.8% plunge for FY20 due to Covid-19.

In a note on Monday (Feb 14), IHS Markit research analyst Tanisha Bhardwaj said the dividend payouts for FY22 are forecast to grow 4.6% y-o-y, supported by strong liquidity and capital buffers.

However, she said there is a mixed picture for dividends in FY21.

Bhardwaj said AMMB Holdings Bhd decided to hold dividend payouts until the end of the year owing to cautious capital management, while CIMB Group Holdings Bhd is expected to boost its year-end dividend more than threefold compared to the previous year.

She said Malayan Banking Bhd (Maybank) and Public Bank Bhd will continue to be the top dividend contributors.

Bhardwaj said the Malaysian banking sector outlook for FY22 is stable as economic activity is expected to return to pre-Covid-19 pandemic levels, leading to more jobs and higher wages, as well as a gradual increase in interest rates that will help banks improve net interest margins and profitability.

“However, there are still uncertainties around the Covid-19 pandemic and prolonged supply chain disruptions, as well as natural disaster risks, such as flood.

“The upbeat trend is aligned with the regional sentiment across Southeast Asia.

“Banks in Thailand, Singapore and Indonesia are poised for steady growth in the new year,” she said.

Bhardwaj said banking dividends for all four markets are expected to rise by 9.25% on average for FY22.