Lacklustre Nov19 Loan Growth – Up 3.1% Ytd; +3.7% Yoy

The banking system saw loan growth of 3.7% yoy in Nov 2019 while mom growth rose by 0.2%. The 3.1% ytd loan growth translates into an annualized loan growth of 3.4% (relatively in-line with our revised target of 3.3%). We believe that the rest of loan growth in 4Q19 will be driven primarily by residential property and other household loans, as well as manufacturing, retail and transportation sectors. We believe that overall downside risks are cushioned by the broad-based economy, resilient domestic consumption spending and a low unemployment rate of 3.2% (Oct19). Details of the November loan-growth trends are as follows:

i) Business loan growth remain at a subdued pace of 2.4% yoy in November 2019, partially affected by loan repayment activity in the finance/insurance sector, wholesale/retail trade and manufacturing sectors. Real-estate, construction, wholesale/retail, business services and manufacturing are the key business sectors (accounting for 32.4% of system loans) underpinning system loans.

ii) Household loan growth was up 4.7% yoy in November driven by growth in residential mortgages, personal financing and credit cards. New loan applications and approvals however dipped on a mom basis, in particular for mortgages.

Source: Affin Hwang Research - 2 Jan 2020