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Kenanga: Banking sector taking proactive measures to combat climate change

12/08/2022 11:57 AM

KUALA LUMPUR, Aug 11 (Bernama) -- Malaysia’s banking sector is taking proactive measures to combat climate change and is cognizant of the necessary changes to be implemented to encourage sustainable practices, said Kenanga Investment Bank Bhd.

In a note today, the research firm said the adoption of sustainable or green financing is becoming more widespread with financial institutions taking charge as a leading catalyst for economic growth.

“Through the facilitation of crucial financial services, banks are at the forefront of promoting and accelerating the transition of their clients to more sustainable operating standards and lifestyles.

“For this, Bank Negara Malaysia released its Climate Change and Principle-based Taxonomy discussion paper on April 30, 2021, to guide financial institutions on various elements which could make their evaluations more comprehensive,” said Kenanga.

The document highlighted risk assessment criteria as well as remedial measures that could be implemented to allow for a more effective transition.

Kenanga said while some banks may be progressing faster than others, the firm does not discredit the progress made by the rest.

“For now, we believe the growth projections of sustainable financing should be in sync with our overall expectations on the industry, tapping into economic recovery and the reopening of borders to support business activities.

“Although household loans may taper off on higher interest rates, competitive offerings on retail green energy financing products may spur interest,” it said.

The research firm has maintained its “Overweight” call on the banking sector for its loan growth trajectory and overnight policy rate-led margins expansion.


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