Malaysia loan growth climbs 8.6% y/y and 4.6% YTD in August

Consumer loan growth drove the development.

Malaysia August loan growth (YTD 4.6%) at 8.6% y-y was led by consumer loan growth of 11.6%--albeit slower than 12.2% at 2Q end--while business loan growth was 5.1%y-y (5.9% at 2Q end).

According to a research note from Nomura, mortgage loan growth remained robust at 13.6% y-y while passenger car loans moderated to 5%, coming off from the 6% levels at the start of the year.

Business loan growth was driven by general commerce (8% y-y), financing, insurance/business services-related loan growth of 7.2% y-y and building and construction-related loan growth of 10%.

Here's more from Nomura:

Manufacturing related loan growth was a modest 2%. On a m-m basis, segments leading the weaker growth were general commerce, finance/insurance and construction.

The sluggish business loan growth can be attributed to the higher bonds issuance activity this year, +20% y-y.

System NPL levels continued to improve in August. Gross NPLs improved to 1.7% of total loans (1.9% in Dec 13).

While residential loans related NPLs improved to 1.3% (Dec 13:1.5%), car loan NPLs increased marginally to 1.4% from 1.3%.

Business loan NPL levels improved to 2.4% (2.5% in Dec 13). Loan loss coverage for the system was 105% in August (Dec 13: 100%).

Deposit growth at 5.6% y-y in August. System deposit growth moderated to 5.6% y-y in August (8.5% in Dec 13), 2.5% YTD, with LDR increasing to 82% (80% at Dec 13).

CASA deposit growth was a moderate 5% y-y, accounting for 26% of total deposits.

Lending yields increased 15bps since June. Average lending rates for Malaysian banks increased 15bps to 4.69% since June, while three-month TD rates also increased 15bps during the same period.

This followed the 25bp hike in the Overnight Policy Rate in July.