Monetary indicators were mixed in Dec as narrow money supply (M1) grew (+4.3% YoY; Nov: +3.8% YoY), while broad money supply (M3) eased (+4.3% YoY; Nov: +4.4% YoY). Meanwhile, total leading loan indicators weakened further following declines in both loan applications and approvals. Foreigners remained net sellers of local bonds and equities during the month.

DATA HIGHLIGHTS  

Monetary indicators were mixed in Dec as narrow money supply (M1) grew (+4.3% YoY; Nov: +3.8% YoY), while broad money supply (M3) eased (+4.3% YoY; Nov: +4.4% YoY). However, reserve money jumped +28.2% YoY (Nov: +10.3% YoY). Meanwhile, total leading loan indicators weakened following a continued decline in loan applications (-16.1% YoY; Nov: -10.1% YoY) and a downturn in approvals (-16.0% YoY; Nov: +20.3% YoY). Similarly, loan disbursements also trended lower (+8.9% YoY; Nov: +13.8% YoY).  

Deposits growth was unchanged at +5.9% YoY (Nov: +5.9% YoY) despite moderation across the board; business (+9.7% YoY; Nov: +11.0% YoY), households (+2.0% YoY; Nov: +2.4% YoY), and foreign (+8.8% YoY; Nov: +10.7% YoY).  

The household loan-deposit gap was relatively steady following monthly growth in both household loans (+0.6%; Nov: +0.5%) and household deposits (+0.6%; Nov: +0.3%). On a YoY basis, both household deposits (+2.0% YoY; Nov: +2.4% YoY) and household loans (+5.9% YoY; Nov: +6.0% YoY) moderated.  

Total loans growth picked up (+5.7% YoY; Nov: +5.5% YoY), on the back of stronger business loans growth (+3.3% YoY; Nov: +3.0% YoY) while household loans growth trended slightly lower (+5.9% YoY; Nov: +6.0% YoY). The lower household loans growth was due to a decline in disbursements for passenger cars and personal uses, followed by moderations in disbursements for properties. Meanwhile, gross issuance of corporate bonds jumped to RM42.9bn (Nov: RM9.4bn), due mainly to higher issuances in finance, insurance, real estate & business service.  

Loan applications continued on a downtrend (-16.1% YoY; Nov: -10.1% YoY), following declines in both household loan (-19.1% YoY; Nov: -18.4% YoY) and business loan (-10.9% YoY; Nov: +3.3% YoY) applications. For households, the steeper decline mainly stemmed from continued decreases in passenger cars and properties, coupled with moderations in credit card applications. For the business sector, lower applications were recorded across most purposes, particularly in information & communication. Meanwhile, loan approvals also declined (-16.0% YoY; Nov: +20.3% YoY), amid decreases in both household (-15.9% YoY; Nov: -12.9% YoY) and business (-16.2% YoY; Nov: +71.4% YoY) approvals.  

Foreigners remained net sellers of local bonds in Dec (-RM0.8; Nov: -RM1.3bn), albeit at a slower pace, as global market sentiment remained primarily risk-averse. Foreigners also continued reducing their holdings of equity (-RM1.5bn; Nov: -RM0.3bn) during the month.

HLIB’s VIEW

Malaysia growth is expected to moderate as base effect dissipates and effect of supportive policy measures such as special EPF withdrawal scheme fades. Following weaker global growth and slower domestic demand, we maintain our 2023 GDP forecast at +4.0% YoY (2022e: +8.2% YoY).

Source: Hong Leong Investment Bank Research - 2 Feb 2023