Banking industry likely to grow moderately in 2019

The forecast is based on the economic performance of major countries around the world, says UOB Malaysia MD


The banking industry is expected to grow moderately this year, amid global challenges and particularly with the ongoing US-China trade war.

United Overseas Bank (M) Bhd (UOB Malaysia) MD and personal financial services country head Ronnie Lim Kheng Swee said the forecast is based on the economic performance of the major countries.

Lim is rather upbeat about the penetration rate of cashless transaction in the country (Pic: TMRpic)

“The US was forecast to grow at 2.9%, but is expected to taper to only 2.6%. The growth has been moderated. China, for example, has an earlier forecast of 6.6%, but is going to actually grow a bit less, at 6.2%.

“The UK, Japan and all the developed countries grew 1%-2% last year and they are also expecting a moderate growth this year as well,” he said at the launch of UOB Visa Infinite Metal Card in Kuala Lumpur yesterday.

Lim said the lowered expectations are also expected to affect the overall GDP growth.

“As for the ongoing trade war between China and the US, hopefully, something positive can come out of it by end of February. How countries, including Malaysia, chart their growth will depend on how the trade discussions between US and China end up in February,” he said.

Last year in December, US President Donald Trump and Chinese President Xi Jinping agreed to a 90-day trade war truce in Buenos Aires, Argentina, which was supposed to enable the two sides to bridge the large differences between their positions in key issues.

Meanwhile, Lim is rather upbeat about the penetration rate of cashless transactions in the country.

“From our own data, even the affluent segment, the number of transactions using paywave has grown from 12% in early 2018 to 22% at the end of 2018. It’s more or less doubled. Malaysians are learning to not bring cash whenever they shop,” he said.

Lim said the growing affluence among Malaysian consumers is also giving rise to a a new market of consumers who travel extensively for work or leisure.

According to UOB Malaysia’s data, travel-related expenditure among affluent cardholders has grown by 25% since 2016.

In 2018 alone, affluent cardholders spent RM205 million on travel-related products and services, a 23% increase from the previous year.

Travel-related spending experienced the highest growth across all spend categories in 2018, followed by insurance (10%), retail (7%) and medical (7%).

In 2018, 20% of cardholders’ total credit-card billings were charged in foreign currencies, affirming that Malaysian cardholders are using their credit card overseas.

Lim said UOB’s card business is almost reaching a one-million card-base and it has contributed to some 30% of the bank’s top-line revenue growth in 2017.

He said UOB’s existing 60,000 Visa Infinite Credit Card members are also expected to subscribe to the bank’s new offering.

The UOB Visa Infinite Metal Card, the first bronze metal credit card in Malaysia, offers travel-related rewards and benefits to meet the exacting luxury travel needs and expectations of its affluent customers.

Benefits of the card include first-class travel privileges, a competitive air miles redemption programme, accelerated reward points for overseas spend and a 24-hour worldwide concierge service.

The card, which is available by invitation to customers who have a minimum annual income of RM300,000 and investable assets of above RM3 billion with UOB Malaysia, was launched in partnership with global payments technology company Visa Inc.

Ng says Malaysia continues to see strong growth in the number of affluent Malaysians at close to 20% YoY (Pic by Muhd Amin Naharul/TMR)

Visa country manager for Malaysia Ng Kong Boon said Malaysia continues to see strong growth in the number of affluent Malaysians at close to 20% year-on-year (YoY).

“We believe it is important to provide affluent cardholders a product that tailors to their premium travel and lifestyle requirements,” he said.