Malaysia’s biggest lender Malayan Banking Bhd. is halfway toward meeting its target of putting 80 billion ringgit ($17.3 billion) toward sustainable finance by 2025.
A big chunk of the green loans has been disbursed to support Singapore-based companies’ shift to low-carbon sources, Maybank Group Chief Executive Officer Khairussaleh Ramli said in an interview at his office.
“We can talk about moving into renewables straight away, but equally important is how we support our clients on transition financing, transition advisory,” he said.
Maybank is among major Malaysian banks pledging to funnel money into green loans. CIMB Group Holdings Bhd., which counts sovereign wealth fund Khazanah Nasional Bhd. as its largest shareholder, aims to allocate 60 billion ringgit to sustainable funding by 2024, twice its initial goal, while RHB Bank Bhd. plans to put 20 billion ringgit toward sustainable funding by 2026.
The amounts, while large, aren’t enough to wean businesses off fossil fuels and address other sustainability goals. Malaysia is estimated to need 637 billion ringgit of investments over the next three decades to support its renewable energy goal to reach 70% of the energy mix by 2050. The country would “need support from overseas” for funding, Khairussaleh said.
READ: Developing World Needs More Funds to Go Green, Malaysia Says (1)
The Asian Development Bank estimates that Southeast Asia needs annual investments of $210 billion to meet its climate-change goals, prompting Maybank to further expand its footprint in the region.
Already the Southeast Asia’s fourth-largest lender by assets, Maybank has made Cambodia a new universal banking market, Khairussaleh said. The Malaysian lender, currently No. 11 in Cambodia, could be in the top 10 in the local market soon, he added.
Excerpts from the interview:
- Maybank to spend up to 4.5 billion ringgit on capital expenditure in the next three-to-five years, mainly for upgrading its digital infrastructure
- The lender expects Bank Negara Malaysia to keep interest rates on hold for the rest of the year as inflation eases
- Expects further compression in net interest margins as competition for deposits and transmission of higher policy rates to savers push up funding costs
- Expects foreign investors to return to Malaysia in a “big way” as there’s greater clarity on policy and direction of the economy
- Maybank isn’t averse to inorganic growth but any M&As must align with the basic principle of adding value, right timing, right price
- Sees strong growth in Islamic wealth and plans to claim global leadership in this segment
- Rules out plans to list insurance unit Etiqa as it is profitable and has potential to grow in Malaysia and the region
READ: Maybank’s Margin Might Run Out of Steam on Deposit Competition
(Corrects capex value to 4.5 billion ringgit in first bullet in story published on Aug. 14)
Author: Elffie Chew, Ram Anand and Ravil Shirodkar