Improving Banking Supervisory Mechanisms
In the OIC Member Countries
90
Figure 52: Risk-Weighted Asset Decomposition, Malaysia
Source: Bankscope
Figure 53: Profitability of the Banking Sector, Malaysia
Source: Bankscope
Profitability of the Malaysian banking sector mostly relies on interest bearing assets. On the
other hand, one third of banking profit comes from non-interest income based on commissions
and other banking services. Net gains on trading and derivatives constitutes a marginal
fraction of total profits. Trading activity in the Malaysian banking system is rather small as
only 2% of the securities portfolio of the Malaysian banking system is held for trading
securities. Relatively small fraction of trading securities further supports minor role of market
risk in the banking system.
Risk Weig. Ass.
- Credit Risk
90%
Risk Weig. Ass.
- Market Risk
2%
Risk Weig. Ass.
- Op. Market Risk
8%
Risk-Weighted Asset Decomposition
Net Interest
Income
67%
Net Gains on
Trad. and Der.
1%
Non-
Interest
Operating
Income
32%
Profitability of the Banking Sector