• Broad money (M3) grew by 7.4% in November
• Higher loan growth in November; highest growth since April 2016
• Loan application slumped by -24.3% in November, the highest decline ever recorded
• Loan approval rate at 11-month high; impaired loan contracted
• Downward trend of annual loan growth is expected to continue in 2019

Broad money supply (M3) grew by 7.4% yoy in November, slightly higher than the previous month’s growth of 7.1%. It was the highest increase since March 2015 (7.9%). The significant rise was supported by fixed deposit (Nov: 8.6%; Oct: 8.5%), demand deposit (Nov: 3.6%; Oct: 3.2%), savings deposit (Nov: 4.0%; Oct: 4.1%) as well as foreign currency deposits which surged by 8.5% yoy in November, at 13-month high. In addition, there was a remarkable growth in negotiable instruments of deposits (NID) which rose by 30.5% yoy after declining by 27.1% in October. On monthly basis, M3 moderated to 0.6% in November from 1.4% registered in a month before.

The narrow money supply or M1 increased by 3.3% yoy in November following a 3.1% rise recorded in October. On monthly basis, M1 was up by 0.6% in November after expanding by 0.3% in the preceding month.

Higher loan growth. Loan growth in November remained strong and expanded by 6.2% yoy after an increase of 6.0% yoy in the prior month. The increase was the highest since April 2016 which rose by 6.3% yoy. The growth was mainly underpinned by business sector that gained 6.9% yoy in November (Oct: 6.1%), the highest rise in almost two years (Apr’17: 7.5%). The major sub-sectors that contributed to the expansion were wholesale, retail, restaurants & hotels (Nov: 7.8%; Oct: 5.5%), financing, insurance & business services (Nov: 7.6%; Oct: 7.0%), manufacturing (Nov: 8.8%; Oct: 7.7%), construction (Nov: 16.5%; Oct: 14.6%) and mining (Nov: 10.0%; Oct: 0.7%). In total, these five sectors contributed 26.7% over total loans.

Source: BIMB Securities Research - 2 Jan 2019