POSITIVE on the Sector

Industry loan growth moderated to 5.8% in May 2024 from 6.1% YoY in Apr 2024, and compares against our full-year forecast of 5.5%. We maintain our POSITIVE view on the sector and our BUYs on AMMB, CIMB, Alliance Bank, Public Bank, HL Bank, and HLFG, in that order of preference.

Moderation in Loan Growth

Industry loans growth was a slower 5.8% in May 2024 as compared to 6.1% YoY in Apr 2024. While household (HH) loan growth was stable at 6.5% YoY end-May 2024, non-HH loan growth slowed to 4.8% YoY from 5.7% YoY endApr 2024. Auto financing growth continued to be robust (+10.3% YoY), while non-residential property lending was a faster 6.3% YoY from 5.9% YoY in Apr 2024. On the corporate front, construction lending was a slower 5.6% YoY against 5.8% YoY in Apr 2024 while working capital loans growth was slightly slower at 3.5% YoY in May versus 4.7% YoY in Apr 2024.

Loan Applications Rose at a Slower Pace

Loan applications rose 3% YoY in May 2024, moderating from +13.5% YoY in Apr 2024. Notably, auto loan applications rose just 1.4% YoY in May 2024 versus 14.2% YoY in Apr 2024 while residential property loan applications growth slowed to 5.7% YoY from 14.8% YoY in Apr 2024. Construction loan applications remained robust, up 20.8% YoY but working capital loan applications growth slowed to 8.7% YoY from 16.3% YoY in Apr 2024.

CASA Growth Picked Up Pace

Deposit growth was stable at 5.0% YoY in May 2024 (5.1% YoY in Apr 2024), and compares against 4.6% YoY in Dec 2023. Encouragingly, CASA growth picked up pace to 7.4% YoY from 6.7% YoY in Apr 2024, which is positive for banks’ margins.

Source: Maybank Research - 8 Jul 2024