2 March 2010
Loan growth stays on upward trajectory: System loans +0.9% MoM and +8.6% YoY to RM790.6bn (Dec 09: +1.2% MoM, 7.8% YoY). Lending for mortgages +1.2% MoM, non-residential properties +1.6% MoM, working capital +0.6% MoM and auto vehicles +0.8% MoM. Only declines were personal use -0.9% MoM and consumer durables -13.1% MoM. Trends in lending indicators were firm in Jan 10 with loan applications +14.4% YoY to RM46.0bn, loan approvals +6.7% YoY to RM23.4bn and loan disbursements +7.4% YoY to RM56.5bn. Banking deposits, which rose significantly in Nov-Dec 09 lifted mainly by Maxis’ re-listing, dipped 0.4% MoM to RM1,058bn in Jan 10. Following the sharp 14% decline in Nov-Dec 09, banking system NPLs rose 0.7% MoM to RM28.9bn but gross NPL ratio was stable at 3.2%. With Malaysian economy out of recession and projected to grow 5.5% in 2010 (CIRA estimate), we expect system loans to expand by 8-10% this year.
1 March 2010
Market shifting towards view of early policy rates normalization: (i) 4Q GDP points to subsiding growth concerns, catch-up with region; (ii) Gov Zeti consistently vocal about the need for rate normalization; and (iii) Robust Household credit growth a concern for BNM. n OPR hike could also be accompanied by a 50bp hike in the SRR, followed by another 25bp OPR hike in May, with further hikes dependent on incoming data (we expect a pause in July presently). The hikes would be calibrated to send a signal to those who assume that rates would stay low indefinitely, yet not enough to cause significant real impact.
