- Second consecutive month of positive growth for leading loan indicators. Loans applications recorded a growth of 22.0% YoY in August 2013, similar to July 2013’s 20.7% YoY increase. Loans approved growth was marginally slower though at 9.2% YoY in August 2013, compared to +13.9% YoY in July 2013. Overall, the August 2013 month was positive as this is the second consecutive month of positive growth.

- Signs of life in the corporate segment. The corporate segment’s indicators were much better in August 2013, with loans applied registering a strong growth of 28.7% YoY in August 2013, ahead of the 6.8% YoY rise in July. Corporate loans approved managed to post a growth as well at 5.0% YoY in August 2013, compared to a contraction of 8.0% YoY in July 2013. The household segment held up well, driven mainly by the residential segment. However, the auto market was notably more muted, although this is in line with a historically slower post-festive season.

- Industry loans growth was maintained at 9.3% YoY in August 2013, compared to +9.2% YoY in July 2013. While the retail loans growth remained healthy at 12.3% YoY, the corporate segment is still muted with growth of 3.7% YoY, in August 2013.

- Improved asset quality data. Gross impaired loans were still generally higher in August 2013, but the pace of increase was slower though at only 0.3% MoM compared to an uptick of 3.2% MoM in July 2013. The main increase was due to the other purposes segment. This is unlike in July whereby the large increase came mainly from the working capital segment, and likely related to the steel industry.

- Overall, the industry’s gross impaired loans ratio remained unchanged at 2.0% in August 2013 (July: 2.0%). Loan loss cover was stable at 98.2% in August 2013, compared to 98.0% in July 2013. Overall asset quality has improved given the stable impaired loans data in August 2013.

- Maintain neutral. The latest banking statistics were positive in terms of a better corporate loans segment as well as stable gross impaired loans data. Our TOP BUY is still Public Bank (PBB).

Source: AmeSecurities