Malaysian banks' credit growth hits 5.5% in Nov 2017

It compensated for the sluggish 3.9% industry loan growth.

Maybank Kim Eng reports a decent 5.5% industry credit (loans plus bonds) growth of Malaysian banks in Nov 2017. They also noted some positives that include the pick-up in working capital loan applications, improved liquidity as deposit growth outpaces loan growth, and better overall asset quality.

Here’s more from Maybank:

The much anticipated pick-up in corporate loans failed to materialize, as non-household (non-HH) loan growth slowed to just 2.3% YoY in Nov 2017 from 4.1% YoY in Oct 2017. Though household loan growth was stable at 5.1% YoY, total industry loan growth slowed to just 3.9%. On the bright side, total bond issuances for 11M17 jumped 36% YoY, including which, total industry credit expanded at a decent pace of 5.5% YoY. Trends in loan applications and approvals remain positive, picking up pace in Nov 2017. Most notable is the fact that working capital loan applications have finally turned positive, up 3.9% YoY in November on a 3M MA basis, having contracted for 17 consecutive months.

Interestingly, deposit growth (+4.7% YoY in Nov 2017) has maintained a steady upward trend and as a result, total system deposit growth has now caught up with, and is now expanding at a faster rate than loan growth, for the first time since 2012. CASA formation slowed to 7.9% YoY in Nov 2017 versus 9.5% YoY in Oct 2017, but nevertheless continued to outpace overall deposit growth.

Absolute gross impaired loans (GIL) rose at a marginal pace of 2.9% YoY in Nov 2017 and the overall GIL ratio improved to 1.61% in November from 1.65% in October. Absolute NPL formation has been slowing across all major consumer segments, which is a positive trend.