• Broad money (M3) expanded by 4.6% in March

• Loan growth continued to slow in March

• Household loan growth increased slightly

• Deposits growth edged lower

• Maintain loan growth projection

Malaysia’s M3 growth eased for the third straight month to 4.6% as at end-March from 6.0% in February. The growth slowdown was underpinned by a contraction in net foreign assets (Mar: -2.2% yoy; Feb: -1.8%), reflecting a sustained capital outflow while the growth of claims on private sector moderated for the fourth straight month (Mar: 5.7% yoy; Feb: 5.9%) whilst net claims on government slowed further in March (Mar: 44.2%; Feb: 48.6%). On monthly basis, M3 increased 0.5% from -0.9% registered in a month before.

Meanwhile, growth of the narrow money supply or M1 increased to 2.5% yoy in March (Feb: 0.5%). The higher growth was attributable to a rebound in demand deposits (Mar: 2.8%; Feb: 0.2%) but was offset by a slower progress in currency in circulation (Mar: 1.3%; Feb: 1.6%). On monthly basis growth M1 increased 1.3% (Feb: -1.4%).

Loan growth continued to slow in March, growing by 4.9% yoy (Feb: 5.0%; Jan: 5.5%), driven by a slowdown in loans extended to both the corporate and household sectors. Corporate loans growth eased further to 4.4% yoy during the month (Feb: 4.7%; Jan: 5.4%), as slower growth of loans extended to the agriculture, mining & quarrying 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.

On the other hand, growth of household sector loans increased slightly for the month to 5.3% yoy (Feb: 5.2%), in tandem with the gradual increase in purchase of securities and purchase of fixed assets other than land and building. Similarly, on monthly basis, total household loans increased by 0.4% (Feb: 0.1%).

Source: BIMB Securities Research - 2 May 2019