Loan Growth Raised to 6.1% in 2024

We raise our loan growth forecast for 2024 from 5.8% to 6.1%, underpinned by increases in consumer and business loans of 6.3% (from 5.9%) and 5.9% (from 5.6%), respectively. According to Bank Negara Malaysia (BNM), total loans and advances rose 6.0% YoY and 0.1% MoM in April 2024. The business segment upheld a robust growth trajectory, to improve by 5.4% YoY (-0.3% MoM). The improvement in business loans is noteworthy, rising at a YTD growth rate of 1.0% vs a contraction of 0.1% in April 2023.

By sector, only three major sectors experienced a YoY loan contraction, compared to six in our last review, indicating a broader economic improvement compared to December 2023. By purpose, loans for Working Capital increased by 4.7% YoY. However, loans for Education, Health, & Others, Agriculture, Forestry & Fishing, as well as Electricity, Gas, Steam & Air, continued their downward trend with declines of 1.9%, 3.7% and 27.1% YoY, respectively. Conversely, other segments experienced healthy loan growth, particularly Mining & Quarrying (+10.9% YoY), Wholesale and Retail Trade (10.3% YoY), Finance, Insurance, & Business Activities (10.2% YoY), Water Supply, Sewerage & Waste (9.4% YoY), Manufacturing (+5.2% YoY), and Transportation & Storage (2.4% YoY).

The Construction sector grew for its third consecutive month, rising at a more robust pace of 2.5% YoY (-0.1% MoM). Additionally, Accommodation & Food Services continued to show growth with a 7.4% YoY increase, along with Information & Communication, which rose by 2.0% YoY.

Source: TA Research - 7 Jun 2024