KUALA LUMPUR: The Malaysian banking sector continued to record steady loan growth of 5.5 per cent year-on-year (y-o-y) in September 2025, supported by stronger month-on-month (m-o-m) expansion, according to CIMB Securities Sdn Bhd.
The brokerage firm said it observed a discernible positive trend emerging in new business and household loan approvals, particularly in the third quarter of 2025.
"Business loans momentum improved to 5.4 per cent y-o-y in September 2025 (from 5.2 per cent y-o-y in August 2025) on a more robust 0.7 per cent m-o-m expansion, driven by larger corporates investment-related loans," it said in a research note.
"Growth in SME loans (accounting for 19 per cent of the banking system loans), continued to exceed industry growth (September 2025: 8.1 per cent y-o-y),” it added.
On household loans, CIMB Securities noted the growth slowed slightly to 5.5 per cent y-o-y in September 2025 compared to 5.7 per cent in the preceding month, due to the moderation in the automotive, residential property, personal, and credit card financing segments.
The key economic sectors, namely financial and insurance, real estate, utilities, manufacturing, information/communications, and retail, saw robust growth.
CIMB Securities added that funding and liquidity conditions within the banking system remain healthy and supportive of growth.
"System deposits growth accelerated to 5.2 per cent y-o-y in September 2025 from 4.8 per cent y-o-y in July-August 2025, driven by stronger current account and savings account (CASA) growth of 8.1 per cent y-o-y in September 2025.
"Corporate deposits also picked up (7.8 per cent y-o-y in September 2025) as Negotiable Instrument of Deposit (NID) placements rose (20.8 per cent y-o-y) while foreign currency deposits surged 25.9 per cent y-o-y," it said.
With no signs of liquidity tightening, Malaysian banks continue to have ample room to support lending growth, based on a loan-to-fund ratio of 82.6 per cent as of September 2025.
"Overall credit risks are benign, as gross impaired loans (GIL) increased 1.0 per cent year-to-date September 2025. Banking sector asset quality remained steady, with a marginal decline in the GIL ratio to 1.41 per cent in September 2025 from 1.43 per cent in August 2025,” it added.
CIMB Securities has maintained a "Neutral” stance on the banking sector, with a positive bias.
While earnings visibility is improving, driven by supportive macro tailwinds, firmer loan growth, and fee income recovery, near-term upside could be capped by a lower-for-longer net interest margin environment.
It noted that sector fundamentals remain resilient, underpinned by strong capital and liquidity buffers (Common Equity Tier 1: 14.5 per cent; liquidity coverage ratio: 152 per cent; loan loss reserve: 130 per cent), providing strong downside support.
The brokerage’s preferred stock picks are RHB Bank
(Buy: Target price (TP): RM7.80; Hong Leong Bank (Buy; TP: RM22.45), and Public Bank (Buy; TP: RM4.90). - Bernama
