Loan growth is likely near its peak for 2022 while industry loan growth rose by +5.6%yoy, the strongest performance in over a year.
For the 2HCY22F loan growth is expected to moderate, given higher interest rates and poor leading indicators in recent months.
MIDF says business loans are set to offset weaker retail loan performance in 2HCY22F. Retail loans are expected to fall off due to the end of the Home Ownership Campaign and car sales tax exemption.
Business loans, on the other hand, should benefit from the reopening of borders, the resumption of trade as well as enhanced mobility.
After a lackluster couple of months, both loan applications and approvals staged a comeback. Notably the sharpest spike was concerning the passenger car loan segment, as buyers sought to lock in vehicle purchases before the sales tax exemption deadline.
Jun-22 saw total loan growth rose by +5.6%yoy and +0.7%mom, with both residential mortgages and working capital loans serving as the two biggest contributors.
Loan growth may have already peaked for 2022F, given the weaker leading indicators in previous months.
"We reduce our 2022F system loan growth expectations to the +4.5-5.0%yoy range, with 2HCY22F loan growth expected to be moderated by inflationary pressures and higher interest rates," says MIDF.
FD growth rates jump to +3.0%yoy following the OPR hike to +2.00% in May-22. This positive trend is expected to continue, premised on the BNM’s hawkish policy.
System GIL nudged upwards by +1bps mom to 1.65%. Interest spread widens by +9bps mom. Average lending yields saw sizeable jump after OPR hike, while deposit rates have yet to fully adjust.
Retail loans jump upwards
Retail loans grew by +6.5%yoy, with residential mortgages and hire purchase loans again acting as reliable growth drivers.
Credit cards financing continue face pace growth. Credit card loans grew by +12.6%yoy, driven by higher consumer spending, possibly elevated by Hari Raya festivities.
Notably, credit card financing continues its streak of impressive growth, leaping to +12.6%yoy (May-22: +5.8%yoy), driven by enhanced consumer spending.
Following the end of the Home Ownership Campaign and car sales tax exemption, we expect retail loans to moderate in 2HCY22F.
Following a slight lapse due to Hari Raya festivities in May-22, business loans posted their strongest growth rates since pre-pandemic times, growing by +5.0%yoy (May-22: +4.6%yoy).
Non- residential mortgages, working capital and security purchase loans acted as core drivers, resuming their steady upward growth.
Following the reopening of borders and trade resumption opportunities, we expect contributions from a strong business loan segment to offset lackluster retail contributions in the latter half of the year.