KUALA LUMPUR, April 30 (Xinhua) -- S&P Global Ratings said Thursday it expects Malaysia's economy to expand between 4.6 percent and 4.9 percent over the next three years, supported by resilient household consumption, artificial intelligence (AI)-related investments and firm technology exports.
Malaysia's status as a net energy exporter, alongside broad subsidies, would help cushion borrowers against oil price volatility, it said in a report.
Despite a strong outlook, S&P projected a modest increase in banks' non-performing loan (NPL) ratio by 10 to 20 basis points to 1.6 percent by end-2027, from a multi-year low of 1.4 percent at end-2025.
Asset quality is expected to remain supported by solid corporate and household balance sheets, although new NPL formation may rise among small and medium-sized enterprises (SMEs) and lower-income households.
Credit losses are forecast to edge higher to 0.2 percent to 0.3 percent of total loans, from 0.1 percent in 2025, partly due to the restructuring of a large corporate account.
"We anticipate banks will set aside higher macroeconomic overlays for the rest of 2026 due to heightened geopolitical risks," it said.
