KUALA LUMPUR: Maybank IB Research is maintaining its industry loan growth forecast of 6.5% for 2016, based on a further slowdown in household loan growth to 6.1% and non-household loan growth to 7%.
In December 2015, industry loan growth picked up pace to end the year at 7.9% (slowing from 9.3% in 2014), in line with its forecast of 7.8%. The industry’s loan/deposit ratio (LDR) was restated to exclude financing funded by Investment Accounts and rose marginally to 88.7% from 88.3% end-November 2015 as total deposit growth slowed further in December 2015 to just 1.8% year-on-year from 3.2% year-on-year end-November 2015.
Foreign currency deposits were 45% higher year-on-year in December 2015, making up 8% of total deposits. Absolute NPLs rose at a slightly faster pace of 4.2% year-on-year during the month but the industry’s gross NPL ratio was stable at 1.6%.
Loan loss coverage slipped to 96.2% from 97.2% end-November 2015. Positively, PDS issuances jumped in December 2015 to RM23.9bil from RM7bil in November. As such, 2015 caught up to 2014 with total PDS issuances of RM85.1bil.
Maybank said in a note on Tuesday that its Neutral stance on the sector is unchanged with Buy calls on AFG, HL Bank and HLFG.
However, as consumer sentiment has continued to weaken, it is taking a more conservative view towards Bank Islam’s (100% owned by BIMB) personal financing portfolio and have factored in higher credit costs.
“We lower our FY16/17 earnings forecasts for BIMB by 6%/7% and our SOP-derived TP to RM3.80 from RM4.50. We downgrade the stock to Hold from Buy,” it said.
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