Malaysia’s banking sector is expected to post strong earnings for the first quarter of 2024, supported by robust loan growth and a rise in non-interest income (NOII). RHB Research predicts that loan growth, which outpaced deposit growth, will fuel net interest income (NII) gains year-over-year. Additionally, banks’ gradual reduction in deposit rates is anticipated to enhance net interest margins (NIM). Bank Negara data revealed a 6% year-over-year loan growth in Q1, led by residential mortgages and loans to small and medium enterprises (SMEs). Both RHB and MIDF Research anticipate solid earnings driven by healthy fee-based activities and foreign exchange impacts, despite a mixed outlook for NIM due to ongoing deposit competition. They recommend a neutral stance on the sector, noting opportunities despite a moderate growth outlook for 2024.