Still positive on sector

Loan growth accelerated to 5.6% YoY in June from 5.0% YoY in May. Growth, however, was partially distorted by the decline in loans back in June 2021, following the recommencement of a nationwide lockdown. Our loan growth of 4.9% for 2022 still stands for now. We remain POSITIVE with BUYs on HLBK, RHB, AMMB, ABMB and HLFG.

Skewed by lockdown last June

Industry loans jumped 5.6% YoY in June 2022 from 5.0% YoY in May. This growth was skewed in part by another nationwide lockdown last year, which recommenced on 1 June 2021 and caused a YoY slowdown in loan growth in June 2021. Household (HH) loan growth expanded 5.2% YoY in June 2022 (4.8% YoY in May) while non-HH loan growth was 5.3% YoY versus 4.9% YoY in May. With the opening up of the economy, credit card spending has gathered pace and credit card loans jumped 12.6% YoY in June 2022. Working capital loans expanded 7.4% YoY (+6.7% YoY) in May, but construction lending continued to experience a contraction, this being the 14th straight month of contraction.

Widening negative returns on deposits

Inflation jumped to 3.4% in Jun 2022 from 2.8% in May 2022 and 2.3% in Apr 2022. Consequently, negative returns on deposits widened to -1.54% from -0.96% in May 2022. Deposit growth was 5.3% YoY in June, as compared to 5.0% YoY in May 2022. CASA growth was slightly faster at 8.8% in June versus 8.1% YoY in May. The industry’s CASA ratio was stable at 32.4% end-Jun 2022.

GILs up 17% YTD

Impaired loans continue to tick up with the expiry of the PEMULIH loan scheme in Dec 2021. Gross impaired loans (GILs) rose 17% YTD in absolute terms and the GIL ratio was marginally higher at 1.65% end-Jun 2022 from 1.64% end-May 2022 and 1.44% end-Dec 2021. The uptick was nevertheless restricted to certain loan classes such as credit cards and personal loans, as well as construction. Asset quality was otherwise relatively stable across most other loan classes.

Source: Maybank Research - 1 Aug 2022