- Leading loan indicators diverged in October 2015. Loans applications growth improved substantially to 12.8% YoY in October 2015, compared with -2.0% YoY decline in September 2015. Loans approved continued to decline, by 4.4% YoY in October 2015, following a large shrinkage of 15.2% YoY in September 2015. Thus, October 2015’s leading indications diverged in terms of healthy loan applications but soft loans approval growth continues.

- Leading loan indicators supported mainly by the other purposes segment. The main driver to both the loans applications and approvals segments was mainly the other purposes segment, which includes the public sector financing sector. Given the lumpy nature of this segment, we would wait and see if the trend is sustainable.

- Deposit growth decelerated in October 2015. Deposit growth decelerated to 3.7% YoY in October 2015, from 5.4% YoY in September 2015. This the slowest growth rate since September 2002’s 3.0% YoY rate.

- Industry LDR inched upwards to another new recent peak. The industry’s loan-to-deposit ratio (LDR) remained well above the 90% level, touching another new recent peak at 91.2% in October 2015, from 90.1% in September 2015. This is the third consecutive month the industry LDR surpassed the 90% level, since the LDR level reached 90.5% in December 2002.

- Maintain NEUTRAL. October 2015’s leading indications were propped up mainly by a spike in the other purposes segment. Elsewhere, deposit growth remained soft, while industry LDR remained above 90%. We maintain our sector rating at NEUTRAL.

Source: AmeSecurities Research - 1 Dec 2015