Money supply (M3) eased to +4.6% YoY in Mar 2019 (Feb 2019: +6.0% YoY) and +5.8% YoY in 1Q 2019 (4Q 2018: +7.5% YoY) on slower credit and deposit growth. Consumer credit data suggest continued moderation in real private consumption in 1Q 2019 from last year’s consumption tax holiday driven growth. Overall credit growth is expected to be firmer with the commencement of major infrastructure and Government development projects that were previously put under review.

Continued deceleration in credit growth

Private sector net financing growth eased for the fourth month to +5.5% YoY in Mar 2019 (Feb 2019: +5.8% YoY) on slower expansions in corporate bonds (Mar 2019: +7.1% YoY; Feb 2019: +7.9% YoY) and banking system’s total loans (Mar 2019: +4.9% YoY; Feb 2019: +5.0% YoY). Industry’s loans growth moderated as business loans growth decelerated (Mar 2019: +4.1% YoY; Feb 2019: +4.3% YoY) amid sustained household loans growth (Mar 2019: +5.3% YoY; Feb 2018: +5.2% YoY).

Business loans growth was dragged by slower growth in loans for “working capital” (Mar 2019: +4.3% YoY; Feb 2019: +5.2% YoY), “transport, storage & communication” (Mar 2019: +5.2% YoY; Feb 2019: +5.8% YoY), “construction” (Mar 2019: +8.0% YoY; Feb 2019: +10.7% YoY), “finance, insurance & business services” (Mar 2019: +5.7% YoY; Feb 2019: +7.0% YoY) as well as lower credits to “mining” (Mar 2019: -22.6% YoY; Feb 2019: -21.3% YoY) and “real estate” loans growth (Mar 2019: -2.3% YoY; Feb 2019: -1.1% YoY) which offsets more financing to “wholesale & retail trade, hotels & restaurants” (Mar 2019: +8.2% YoY; Feb 2019: +7.1% YoY) and “Manufacturing” (Mar 2019: +9.8% YoY; Feb 2019: +9.7% YoY). Household loans growth momentum was sustained by the steady +7.1% YoY rise in residential property loans and pick up in credit cards (Mar 2019: +2.5% YoY; Feb 2019: +2.0% YoY) and non-residential property loans (Mar 2019: +2.6% YoY; Feb 2019: +1.9% YoY) vs slower personal loans (Mar 2019: +6.5% YoY; Feb 2019: +7.2% YoY) and continued decline in loans for purchases of transport vehicles (Mar 2019: -0.6% YoY; Feb 2019: -0.7% YoY) and consumer durables (Mar 2019: -12.9% YoY; Feb 2019: -13.1% YoY).

2019 YTD, industry loans growth averaged +5.1%, in line with in-house full-year forecast. Overall credit growth is expected to be firmer with the commencement of major infrastructure projects and Government development projects that were previously put under review following the change in Government after last year’s general election.

Consumer spending moderated further in 1Q 2019

Consumer credit data suggest continued real private consumption moderation in 1Q 2019 (4Q 2018: +8.5% YoY; 3Q 2018: +9.0% YoY) and this year (2018: +8.1%) from last year’s consumption tax holiday driven growth. Although household loans growth was sustained in Mar 2019 as noted above, it slowed to +5.3% YoY in 1Q 2019 (4Q 2018: +5.7% YoY; 3Q 2018: +6.0% YoY), with similarly lackluster household loans applications (Mar 2019: -3.9% YoY; Feb 2019: -8.6% YoY; 1Q 2019: -5.0% YoY; 4Q 2018: - 3.5% YoY) and approvals (Mar 2019: +1.3% YoY; Feb 2019: -10.3% YoY; 1Q 2019: -3.1% YoY; 4Q 2018: -0.5% YoY). Domestic credit card spending by locals rebounded monthly (Mar 2019: +4.0% YoY; Feb 2019: -2.6% YoY) but slowed quarterly (1Q 2019: +3.7% YoY; 4Q 2018: +4.4% YoY).

Source: Maybank Research - 25 Apr 2020