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Bank loan growth to sustain at 5.1pc YoY in 2022, says RHB Research

Publish date: Fri, 01 Jul 2022, 11:39 AM

KUALA LUMPUR: Domestic banks' loan approvals in January-May 2022 increased 19.5 per cent year-on-year (YoY), pointing to the banks' increased optimism on business prospects, RHB Research said.

In particular, the bank-backed research firm said loan approvals to businesses gained 30.6 per cent YoY during the period, while household approvals grew by 12.6 per cent.

"The strong pipeline for approvals leads us to believe that loan growth will be sustained at 5.1 per cent YoY in 2022, notwithstanding the expected moderation in the second half (2H) 2022," it said in a note today.

RHB said system loans grew five per cent YoY, driven by loans to the household sector, which also grew by five per cent YoY. 

Other sectors that drove growth include the wholesale and retail trade (+12.1 per cent YoY) and transport (+13.9 per cent YoY) sectors, while construction loans recorded a 5.9 per cent YoY contraction.

By purpose, loans for residential mortgages (+6.8 per cent YoY) and working capital (+6.7 per cent YoY) remained the biggest contributors to loan growth.

RHB Research said that on a month-on-month basis (MoM), system loan applications in May dipped 10 per cent, likely due to the increase in the average lending rate to 3.68 per cent from 3.56 per cent in the previous month.

On the other hand, the 21-24 basis points (bps) increase in fixed deposit rates saw fixed deposits ticking up by 0.6 per cent MoM.

"However, this may have been at the expense of current account saving account (CASA) deposits, which contracted 1.3 per cent, MoM.

"As a result, while banks maintained system LDR (loan deposit ratio) at 86.8 per cent, the sector's CASA ratio shrunk to 42.6 per cent from 43.1 per cent at end-April," it said.

RHB research has maintained its 'Overweight' call on Malaysian banks, with top picks including Hong Leong Bank Bhd, AMMB Holdings Bhd and Malayan Banking Bhd.

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