Banking Statistics, June 2008
– Still strong, but some softening expected
Loans growth. Banking system loans growth rose 11.7% YoY in June (May:
+11.0%), where both household and business loans grew by 8.9% YoY (May:
+8.7%) and 14.4% YoY (May: +12.6%) respectively. 2008-YTD loans growth was
6.5%, which was more positive than 2007-YTD’s +3.5%.
Forward indicators. Nevertheless, overall forward-looking loan indicators were
still showing signs of weakness in June: -5.2% YoY in loan applications (May: -
9.7%) and -23.4% YoY in loan approvals (May: -19.0%).
Business loans applications declined (June: -25.8% YoY; May: -27.1% YoY) and
approvals (June: -45.6% YoY; May: -38.2% YoY). However, household loans
applications grew (June: +32.4% YoY; May: +18.8% YoY) and approvals (June:
+22.9% YoY; Apr: +20.4% YoY). The cause was high base effect from a large
syndicated bridging finance facility provided during the same period in 2007.
However, on a MoM basis, business loans application was up 6.4% due to higher
financing for working capital, especially in transport, storage and communications,
while household loans application was also up 4.4%.
Deposits growth. Banking system’s total deposits raised at 10.9% YoY (May:
+8.7%), with contributions mainly from foreign non-bank entities and individuals.
Liquidity. The banking system’s loan-to-deposit ratio was 72.2% in June (May:
71.3%). Bank Negara Malaysia (BNM) injected liquidity into the interbank market
again in June (it injected liquidity in May, after withdrawing for 7 months).
Interest rates. The average lending rate (ALR) continued to decline to 6.08% in
June (May: 6.13%) due to competition and liquidity in the system. Deposit rates
meanwhile remained unchanged. Due to higher inflation, real fixed deposit rates
have turned negative since May (June: -4.38%, May: -0.49%). The ALR-BLR gap
widened further to -0.64% (May: -0.59%).
Asset quality. Banking system capitalisation stayed strong with core capital ratio
at 10.1% (May: 9.9%) and RWCR at 13.0% (May: 13..0%). Strong recoveries
and write-offs resulted in net NPL ratio declining to 2.7% (May: 2.8%). Loan loss
coverage was an estimated 82.4% (May: 80.9%).
(Source: Bank Negara Malaysia)
Comments:
Maintain our recently revised end-2008 and end-2009 loans growth forecast
of 7%-8% (end-2007: +8.6%), following the downgrade in our 2008 real GDP
growth forecast to 5.3% (from 5.7% previously) and the expected 5.1% growth in
2009 in light of the recent hikes in fuel and energy prices.
The factor behind the expected loans growth include a more cautious lending
practices by the banks and softer consumer loans growth, especially in the “bigticket”
segments like home and car loans. This is already evident from the
following measures taken by the banks effective July:
• Increases in hire-purchase (HP) rate for passenger car loans
• Removal of 20-day interest-free period on credit card owners who do not fully
settled outstanding balance.
However, the Minister of Finance (MoF) recently mentioned that banks are
supportive of the Government request to consider helping out borrowers to
reschedule their home loans and re-look at the above-mentioned credit card
policy.
At the same time, business loans growth may help to uphold overall loans growth
due to the higher need for working capital amid rising costs and expectations of
speedier implementation of projects under 9MP and regional development
corridors following the recent mid-term review.
Maintain Overweight on the Banking Sector (bottom-up approach). No
change to our earnings forecasts for the banks. While rising inflation and a
slowing economy may impact loans growth and NPLs, especially moving into
2009, we do not think the impact is detrimental – we are keeping watch on the
situation. Our top sector pick remains Public Bank (PBK MK; Buy; TP: RM12.60)
for its good dividend yield potential.
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发表于 1-8-2008 08:36 AM
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