Maybank IB raises banking loan growth estimates

KUALA LUMPUR: Loan application trends in the banking sector suggest slower loan growth in 2019 while lagging current account, savings account (CASA) growth suggests ongoing pressure to net interest margin, says Maybank Investment Bank research.

"We raise our 2018 industry loan growth forecast marginally to 5.6% from 5.3% previously and to 5.1% for 2019 from 4.9% before," it said.

In its Wednesday report, the research house remained neutral on the banking sector but had buy calls on CIMB, BIMB, AMMB, Alliance Bank and HLFG.

"On an annualized basis, industry loan growth was 5.5% in Nov 2018 (5.4% in Oct 2018), led by household (HH) loan growth of 5.5% and annualized non-HH loan growth of 5.3%," it said.

Maybank IB noted that loan application dropped a sharp 24% year-on-year in Nov 2018, and 6.1% year-on-year on a three-month moving average (3M MA) basis.

On a 3M MA basis, mortgage loan applications contracted 2.3% in Nov 2018, while auto loan applications plunged 21.9% YoY in Nov 2018. 

Non-residential property loan applications rose at a slower pace of 4% year-on-year in Nov 2018 versus 10.2% in Oct 2018. 

Meanwhile, working capital loan applications contracted by a larger 16.5% year-on-year in Nov 2018 versus 7.1% in October 2018, this being the fourth consecutive month of contraction. 

CASA growth continued to trail overall deposit growth for the six consevutive month, but was slightly faster at 3.2% year-on-year in November 2018 versus October. 

"The implication here is that deposit competition is likely to persist and that NIMs will remain under pressure," said Maybank IB.

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