KUCHING: Analysts at CIMB Investment Bank Bhd (CIMB Research) believe that loan growth will continue to be suppressed in the coming months due to the implementation of the Goods and Services Tax (GST) and weak leading loan indicators.
“However, we are hopeful that loan momentum will recover in the later part of 2H15 when consumers/businesses start to adapt to the new GST regime,” it said in a sector update yesterday.
“We are projecting loan growth of 8.5 to 9.5 per cent for 2015, with similar expansion rates for both consumer and business loans. Banks’ asset quality is expected to be stable with a forecasted gross impaired loan ratio of circa 1.8 per cent in 2015.”
This was on the back of system loans expanding 8.8 per cent year on year for the month of February, adds RHB Research Institute Sdn Bhd (RHB Research) economist David Chong, despite the shorter working month in February.
“Business loans expanded by 7.6 per cent year on year, underpinned by loans extended to the real estate, finance, insurance and business activities, construction and wholesale and retail trade, restaurants and hotels sectors,” Chong highlighted in a separate report.
“Meanwhile, household loan growth was stable at 9.7 per cent y-o-y, driven by residential mortgages. We make no change to our 2015 system loan growth projection of eight to nine per cent.”
Chong observed some divergence in February’s loan leading indicators.
“Not surprisingly, system loan applications and approvals were down by 20 and 13 per cent month on month respectively, due to the shorter working month in February.
Year on year, however, loan applications slid 17 per cent but loan approvals held up better, down just one per cent.
“Business loan applications were lower by 22 per cent year on year but business loan approvals rose 10 per cent year on year. Meanwhile, household loan applications fell 12 per cent year on year while approvals were down eight per cent year on year.
“Maybank Investment Bank Bhd continued to expect industry loan growth to moderate and maintained its 2015 industry loan growth forecast of 7.8 per cent, predicated on a moderation in household loans growth to 8.4 per cent in 2015 from 9.9 per cent in 2014 and non-household loan growth of seven per cent year on year.”