PETALING JAYA: While Malaysia’s household loan growth saw a month-on-month marginal rise of 0.5 percentage points in August to 4.8%, outstanding business loan growth fell to 3.3% from 3.9% in July.
According to Bank Negara’s monthly highlights for August 2020, total loans disbursed remained steady despite moderating slightly at RM89.19bil, from the high level of RM100bil in July, mainly in loans for the purchase of residential property.
A banking analyst pointed out that the household loan growth was not surprising, given the government incentives provided for housing and automotive sectors.
“The bulk of the housing loan growth was due to previous sales, as it takes some time for loans to be disbursed.
“Housing loan applications are on the rise and housing loan growth is expected to be fairly decent in 2021 following a pick-up in sales.
“As for the automotive sector, the loan growth is partly attributed to some pent up demand, which will likely soften going into 2021, ” he said.
The analyst highlighted that the slowdown in business lending is a concern and should be monitored further.
Despite the economic recovery underway, it remains to be seen how long it will take for businesses to regenerate the income loss that occurred during the movement control order (MCO). Bank Negara also reported yesterday that an estimated 500,000 applications have been received for repayment assistance, with an approval rate of 98%.
“Banks have introduced a range of packages for affected borrowers.
“These include targeted extension of the moratorium, as well as repayment flexibilities to help borrowers based on their specific financial situation.
“There continues to be a steady increase in borrowers choosing to resume payment of their monthly instalments, ” the central bank said in a media statement.
As of August, the total loans repaid amounted to RM83.85bil, representing a decline of 17.7% as compared to RM101.9bil in July. MIDF Research had previously cautioned that loan growth may moderate post loan moratorium as repayments commence.
During the loan moratorium, banks have not been able to accumulate deposits to fund loan growth, and depositors have also been tying up their cash and savings over the longer term to maintain liquidity on the back of uncertainties of the Covid-19 pandemic. However, the research house does not discount that the demand for auto loans and mortgages will provide support to loan growth.
An analyst said that “at the end of the day, the total loan growth will depend on the state of the economy. “We can expect to see faster loan growth in 2021, should gross domestic product (GDP) growth elevate at a higher rate next year.”
Bank Negara also reported that the banking system continues to record a strong liquidity coverage ratio (LCR) with excess liquidity buffers standing at RM220bil.
It said ample liquidity in the banking system is supportive of lending activities and for banks to meet exigent needs.
Loan-to-fund and the loan-to-fund-and-equity ratios remained stable at 82.2% and 71.7% respectively, on the back of sustained growth in deposits.
Meanwhile, exports in July grew by 3.1% due to lower non-electrical and engineering (E&E) manufactured exports, particularly products such as machinery, equipment and parts, as well as optical and scientific equipment.
Going forward, exports are expected to be supported by the improvement in external demand amid the easing of coronavirus containment measures in most economies.