The banking sector may likely see a slower loan growth this year if facilities granted to the business and household segments continue their downward trend, according to Malaysian Investment Bank (MaybankIB) Research.
“Our industry loan growth forecast stands at 6.5 percent for 2016 (7.9 percent in 2015), premised on a further slowdown in household loan growth to 6.1 percent (7.7 percent in 2015) and non-household loan growth to 7 percent (8 percent in 2015).”
In March, loan growth in the business segment softened to 5.2 percent on an annual basis, while that for the household sector slowed down to 6.4 percent.
MaybankIB analyst Desmond Ch’ng noted that further downside is possible “if current trends persist over the next few months.”
Meanwhile, data from Hong Leong Investment Bank (HLIB) revealed that loan applications slightly increased in March, but loan approvals significantly declined.
During the month, loan applications climbed by 6.6 percent year-on-year compared to 5.5 percent gain in February. However, loan approvals fell for the seventh straight month by 18 percent in March versus a drop of merely 10 percent in the previous month.
As a result, the overall loan approval rate slid to 38.5 percent from 44.1 percent in February 2016. In particular, the rate for the business and household segment dipped to 37.6 percent and 39.3 percent respectively.
Mangalesri Chandrasekaran, Editor at PropertyGuru, edited this story. To contact her about this or other stories email mangales@propertyguru.com.my
