With new government policies after the Budget 2019 announcement, AffinHwang Capital expect consumer sentiment to gradually improve and drive consumption spending. — Reuters photo
KUCHING: Malaysia’s banking sector ended 2018 with a slight uptick in its figures, recording 5.6 per cent year on year (y-o-y) growth while expanding by 0.6 per cent month on month (m-o-m).
The annual growth was underpinned by sectors such as manufacturing, retail, business services, construction and households – specifically residential properties, personal use and credit cards.
December saw a pullback in new loan applications and approvals, especially in the manufacturing, construction, education/health sectors, though disbursements remained positive.
Affin Hwang Investment Bank Bhd (AffinHwang Capital) kept its loan growth target of five per cent unchanged for its 2019 estimates, noting that loan disbursements may gradually taper down due to a moderation in new loan applications towards the end on 2018.
“We note that business sentiment, though holding up, had not seen a strong pick up, largely due to caution arising from a slower global growth expectation,” it said in its outlook.
“Longer term, with new government policies after the Budget 2019 announcement, we expect consumer sentiment to gradually improve and drive consumption spending.”
On December’s figures, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) said despite the moderation in outstanding loans, sentiments seemed to be positive ahead as December’s loan applications rebounded 4.8 per cent y-o-y to RM59.8 billion.
“December’s loan applications were driven by Business as Households continued to be in the negative territory albeit at a slower pace. The positive uptick for business was seen in applications for purchase of securities to RM4.3 billion and applications for other purposes.”
Kenanga Research saw that applications for working capital continued to slide, by 1.7 per cent y-o-y to RM12.5 billion.
Weak consumer sentiment still prevails, it added, with broad-based fall in applications with the exception for applications for residential property, which rebounded six per cent y-o-y to RM16.8 billion.
“However, as sentiments improved, approvals slid further, falling 8.5 per cent y-o-y to RM30.9 billion,” it said in a separate note. “Both business and households saw a fall in approvals with business falling at a higher pace while households seemed to moderate.
“Falling approvals in working capital and other purposes dragged Business approvals to RM9.2 billion and RM1.4 billion, respectively. For households, fall in approvals was mitigated by uptick in purchase of residential property, which rebounded to RM7.6 billion while personal use rebounded 11.5 per cent y-o-y to RM1.7 billion
“However, with the fall in approvals outpacing decline in applications, approval rate in the system slid by three percentage points to 51.6 per cent dragged by business with households at 44.4 per cent.”