KUALA LUMPUR: Maybank Investment Bank Research maintained a ‘’neutral” call on the banking sector but raised its loan growth forecast to 5.1 per cent for 2019 from 4.9 per cent, previously.
It also revised upwards the loan growth forecast for 2018 to 5.6 per cent from an earlier projection of 5.3 per cent.
However, it noted that loan application trends suggested slower loan growth in 2019 while lagging current account and savings account (CASA) growth suggested ongoing pressure to net interest margin.
Despite maintaining a neutral call on the sector, the research house recommended a “buy” call on CIMB, BIMB, AMMB, Alliance Bank and HLFG.
“On an annualised basis, industry loan growth was 5.5 per cent in Nov 2018 (5.4 per cent in Oct 2018), led by household (HH) loan growth of 5.5 per cent and annualised non-HH loan growth of 5.3 per cent,” it said in a note yesterday.
Maybank Investment also said loan application fell a sharp 24 per cent, year-on-year (y-o-y), in Nov 2018, and 6.1 per cent, year-on-year, on a three-month moving average (3M MA) basis.
On three-month moving average basis, mortgage loan applications contracted 2.3 per cent in Nov 2018 while auto loan applications plunged 21.9 per cent, year-on-year, in Nov 2018.
Non-residential property loan applications rose at a slower pace of four per cent, y-o-y, in Nov 2018 versus 10.2 per cent in Oct 2018.
Meanwhile, working capital loan applications contracted by a larger 16.5 per cent, y-o-y, in Nov 2018 versus 7.1 per cent in October 2018, this being the fourth consecutive month of contraction.
It said CASA growth continued to trail overall deposit growth for the six consecutive month but was slightly faster at 3.2 per cent, year-on-year, in November 2018 versus 2.5 per cent October. “The implication here is that deposit competition is likely to persist and that net interest margins will remain under pressure,” said Maybank IB.
Meanwhile, Kenanga Research also maintained its “neutral” call on the banking sector on the back of potential total return in the banking universe which is still at six per cent.
The research house also noted that loans application and approvals indicated a slow down with uncertainties and volatility still prevailing in the sector.
It said despite the overall weak sentiment, business loans continued to pick up in pace but household loans slipped further.
“However, we have “outperform” calls for some of the banks including AFFIN, Alliance Bank, BIMB, CIMB, MBSB, and RHB Bank,” it added. -Bernama
