Stable loan growth in August, Maybank IB Research says
KUALA LUMPUR: Maybank Investment Bank Research said there was little to cheer about as far as loan growth is concerned in August, when it expanded 3.9% year-on-year (YoY) while total credit growth was 4.9% YoY including bond issuances.
“With loan application growth waning, the outlook is subdued at this stage. Asset quality deteriorated slightly again with absolute gross impaired loans higher month-on-month (MoM), particularly in the manufacturing sector, ” it said on Tuesday.
Maybank Research said its sector call remained Neutral as the larger caps were fairly valued at this stage, and have a Buy on the smaller to mid-cap banks, there are RHB Bank, AmBank, HLFG, Alliance Bank and BIMB.
It said that August loan growth was stable at 3.9% YoY. Household (HH) loan growth was 4.6%, while non-HH loan growth was 2.9%.
Annualised loan growth was 2.9% in Aug 2019. Including cumulative bond issuances for January to August of RM88.8bil (+30% YoY), total industry credit growth was a slower 4.9% YoY in August versus 5.2% YoY in July.
Working capital loan growth was lacklustre at 2.1% YoY in Aug 2019 vs 1.6% YoY in July.
The research house also said on a three-month moving average basis, loan applications contracted 3.7% YoY in August versus growth of 0.8% YoY in July.
“Loan applications contracted across all major consumer segments and even mortgage applications saw growth drop to just 2.7% YoY in August after having expanded at a rapid double-digit pace over the past three months.
“The only bright spot was in working capital loan applications, which jumped 12.5% YoY on a three-month moving average basis in Aug 2019 versus +1.6% YoY in July 2019, having contracted in the past 11 consecutive months prior to July.
“The industry’s gross impaired loans (GIL) ratio was a tad higher MoM at 1.61% in Aug 2019 versus 1.60% in July.
“On an absolute basis, GILs rose RM337mil MoM, mainly due to an increase of RM304mil in manufacturing GILs. This follows from a RM267mil increase in manufacturing GILs in July 2019 as well.
Source: TheStar