TA Research has maintained its “overweight” stance on the banking sector.
PETALING JAYA: Analysts have maintained their loan growth forecasts for the banking sector this year at 5.7%, supported by consumer loan growth of 6.3% and business loan growth of 4.9%.
TA Research also maintained its “overweight” stance on the sector, underpinned by resilient asset quality, capacity to sustain credit flow, and decent earnings visibility.
The research house noted in a report to clients that total loans grew 5.4% year-on-year (y-o-y) in October, moderating slightly from 5.5% in September.
By segment, consumer loans rose 5.4% y-o-y, 0.5% month-on-month (m-o-m), while business loans increased 5.3% y-o-y and 0.6% m-o-m .
Year-to-date (ytd), overall loan growth stood at 3.9% versus 4.1% in October 2024. This was supported by a 4.4% rise in consumer loans, compared with 5% for October 2024, and a 3.2% gain in business loans compared with 2.8% for October 2024.
TA Research said capital market activity remained strong in October, with the private sector raising net funds of RM136.2bil,excluding redemptions, up from RM106.7bil a year earlier.
Of this, RM4.7bil was raised through new share and warrant issuances compared with RM6.4bil in the same period last year, while debt securities issuance expanded significantly to RM131.6bil compared with RM100.3bil in the same period last year, it added.
TA Research noted household loan growth eased to 5.4% y-o-y in October, moderating from 6.4% y-o-y a year earlier.
“Residential mortgages remained the key driver, though growth slowed to 6% y-o-y from 7.1% last year. Loans for non-residential property rose 7.0% y-o-y, slightly below last year’s 7.3%.”
It added that across other segments, momentum softened with hire-purchase loans expanding by 6.7% y-o-y versus 9.2% a year ago, while personal financing growth eased to 1.6% y-o-y from 3.8% last year.
“Loans for securities purchases contracted further, down 0.3% y-o-y, reflecting continued caution amid weak market sentiment. In contrast, credit card receivables accelerated, rising by 8.2% y-o-y compared with 7.9% a year earlier,” TA Research noted.
The research house also noted that total loan applications slipped 2% y-o-y in October, though they rose 12.3% m-o-m.
The decline was mainly attributable to business loan applications, which fell 10.6% y-o-y, partly offset by a 3.4% y-o-y increase in consumer loan applications, the research house said.
“By sub-segment, applications for non-residential property loans (7.7% y-o-y), residential property loans (6.6% y-o-y), and hire-purchase loans (12.1% y-o-y) all recorded growth.
“In contrast, applications for credit cards (down 13.6% y-o-y), personal financing (down 7.9% y-o-y), and securities purchases (down 23.9% y-o-y) continued to contract.”
TA Research said deposit growth accelerated, with total deposits rising 4.9% y-o-y and 0.2% m-o-m in October.
“Current account and savings account balances rose 7.2% y-o-y. This brought the ratio marginally higher to 31.7%, up from 31% a year ago. “
TA Research also noted that system liquidity remains ample, with the liquidity coverage ratio at 148% compared with 147% for October 2024, while the loan-to-funds ratio slipped slightly to 82.8% from 83.9%.
