• Broad money (M3) surged to a 13-month high (4.6% YoY; Oct: 3.7%)
  
  − Mainly driven by a surge in foreign currency deposits (16.7%; Oct: 8.3%) and expansion in demand deposits (4.0%; Oct: 3.6%). Combined, these two contributed 2.5 ppts (Oct: 1.6 ppts) to overall M3 growth. However, the momentum was partly weighed by a slowdown in fixed deposit (6.0%; Oct: 6.3%).
  
  − MoM: growth unchanged (0.9%; Oct: 0.9%).

• M3 growth was bolstered by greater expansion in claims on the private sector and net foreign assets
  
  − Claims on the private sector (5.2%; Oct: 4.8%): expanded to a twomonth high on higher loans (5.0%; Oct: 4.4%) which mitigated the moderation in securities (6.4%; Oct: 7.4%). Its contribution to overall M3 growth expanded to 5.0 ppts (Oct: 4.6 ppts).
  
  − Foreign assets (5.9%; Oct: 0.7%): increased to a three-month high due to a sharp rebound in the banking system (17.8%; Oct: - 14.8%). Its contribution to overall M3 growth expanded to 1.5 ppts (Oct: 0.2 ppt), a three-month high.
  
  − Net claims on government (11.9%; Oct: 12.3%): growth moderated partly due to a slowdown in claims on government (5.1%; Oct: 7.7%). Nevertheless, its contribution to overall M3 growth remained at 1.7 ppts (Oct: 1.7 ppts).

• Loan growth surged to an eight-month high (4.9% YoY; Oct: 4.0%)
  
  − By purpose: mainly driven by a higher expansion in the working capital (3.1%; Oct: 0.3%) which reached a sixmonth high and contributed 0.7 ppts (Oct: 0.1 ppt) to overall loan growth. Notably, loans for construction rebounded (0.8%; Oct: -1.3%), after four consecutive months of contraction. Overall, loan growth remained supported by sustained residential property (7.3%; Oct: 7.4%) and loan for transport vehicles (9.7%; Oct: 9.4%), which combined contributed 3.6 ppts to overall loan growth (Oct: 3.6 ppts).
  
  − By sector: Constituting 59.6% share of overall loan, the household sector growth remain unchanged in November (5.8%; Oct: 5.8%) while its contribution to overall loan growth edged up to 3.5 ppts (Oct: 3.4 ppts). Growth was also supported by an expansion in finance & insurance (12.4%; Oct: 8.4%) and a rebound in transport & storage (4.6%; Oct: -6.4%) sectors, contributing a combined 0.7 ppts (Oct: 0.3 ppts).
  
  − MoM: Growth expanded to a two-month high (0.8%; Oct: 0.3%).

• Deposit growth surged to a four-month high (5.3% YoY; Oct: 4.3%)
  
  − Growth was predominantly supported by a robust expansion in repurchase agreements (54.7%; Oct: 46.5%), followed by foreign currency deposits (9.0%; Oct: 3.6%) and demand deposits (3.1%; Oct: 2.0%). Together, these three components contributed 3.4 ppts to overall deposit growth.
  
  − MoM: growth sustained (0.4%; Oct: 0.4%).

• 2023 loan growth forecast is retained at 4.0% - 4.5% (2022: 5.7%) and to expand to 4.5% - 5.0% in 2024
  
  − Given the strong loan growth performance in November and the expectation that domestic growth could sustain in the near term, there is a likelihood that 2023 loan growth could settle within our target range at 4.0% - 4.5%. This aligns with our 4Q23 GDP growth target of 3.7% (2Q23: 3.3%) and the overall 2023 GDP forecast of 3.5% - 4.0% (2022: 8.7%). On the monetary policy front, we continue to expect BNM to maintain its overnight policy rate (OPR) at 3.00% throughout 2024 to support the growth trajectory and ensure a stable inflation outlook.

Source: Kenanga Research - 2 Jan 2024