• Broad money (M3) expanded by 6.0% in February

• Loan growth retained a downtrend in February

• Household loan growth slowed further

• Marginal increase in total deposits growth

• Household debt expanding at a slower pace

Malaysia’s M3 growth moderated further to 6.0% as at end-February, after rising to 7.5% in January, dragged by contraction in net foreign assets (Feb: -1.8%; Jan: -3.1%), reflecting capital outflows, and smaller growth of claims on private sector (Feb: 5.9%; Jan: 6.2%) and net other influences (Feb: 7.6%; Jan: 6.8%) whilst net claims on government slowed further in February (Feb: 48.6%; Jan: 57.4%). On monthly basis, M3 declined 0.9% from 0.3% registered in a month before.

Similarly, growth of the narrow money supply or M1 slowed to 0.5% yoy in February (Jan: 1.6%) as increased in demand deposits (Feb: 0.2% Jan: -0.4%) was offset by a drop in currency in circulation (Feb: 1.6%; Jan: 8.5%). On monthly basis growth declined 1.4% (Jan: +0.1%).

Loan growth retained a downtrend in February, with a softer expansion of 5.0% yoy (Jan: 5.5%), driven by a slowdown in loans extended to both the corporate and household sector. Corporate loans growth eased to 4.7% yoy during the month (Jan: 5.4%), as slower growth of loans extended to the agriculture, mining & quarrying, wholesale & retail, utilities and real estate weighed on corporate loan demand. However, it was partly mitigated by higher loans extended to the manufacturing, transport & storage and construction sectors during the month.

Similarly, growth of household sector loans slowed for the sixth straight month to 5.2% yoy in February (Jan: 5.5%), in tandem with the gradual wind down of residential property loans by the banking sector, and sharper decline in passenger car loans. On monthly basis, total household loans slowed at 0.1% (Jan: 0.5%).

Source: BIMB Securities Research - 1 Apr 2019