Malaysia Banking Sector Update

Business loans gather momentum
A faster pace. Loan growth in June was fairly robust at 12.6% YoY and it is the fastest pace thus far this year, having risen steadily over the past few months. While household (HH) loan growth has held steady at close to 11.8% YoY (11.7% YoY  in May), non-HH loans have steadily gathered momentum and were up 13.6% YoY in June (13.4% YoY in May). Annualized loan growth of  12.7% is currently  ahead of our 2012 loan growth forecast of 10.5%. Our forecast is maintained  for now,  while our Neutral call on the sector  is unchanged.  We maintain our BUYs on HL Bank,  HL Financial Group  and  Public Bank  and SELLs on CIMB, RHB Capital and BIMB Holdings.

HH  loan growth at 11.8% YoY.  Non-residential property loan growth slipped marginally, but the pace remains robust at more than 20% YoY,
while personal and credit card loans continued to trend down. Residential property lending  continues to be resilient while  share margin financing and auto loans  have contributed to sustained overall momentum.

Encouragingly, non-HH loan growth gathered pace at 13.6% YoY. Within the non-HH category, BNM reports a pick-up in momentum to 14.3% YoY in June for business loan growth, this being the fastest pace of expansion over the past two years. Notably, construction loans saw growth of 16% YoY, a pick-up from 15.5% in May 12.

Malaysia Banking Stocks – Valuation Summary (click to enlarge)

01 August 2012
by Maybank IB