Malaysian banks' total loans post weaker growth of 5.2% in September

Blame it on sluggish business loans growth.

Malaysian banks' total loans stood at US$372b (RM1,561.1b) in Sep 17 according to UOB Kay Hian, registering weaker growth of 5.2% yoy and 0.2% mom (Aug 17: +5.8% yoy and +0.5% mom). Annualised 9M17 loans growth stood at 3.5% (vs our full-year assumption of 5.0%).

Here's more from UOB Kay Hian:

The weaker-than-expected Sep 17 loan growth trend was a result of sluggish business loans growth which remained flat mom. On a 9M17 annualised basis, business loans grew at a relatively modest 2.4% (2016: +6.9% yoy).

Even if overall mom loan growth were to recover to a relatively healthy 0.6% run rate in the last three months of 2017 (vs 9M17 mom average growth rate of 0.4%), total industry loans growth could still disappoint at 4.5% vs our full-year estimate of 5.0%.

Loan approvals registered a contraction of 1.7% after having recorded positive yoy growth over the past three consecutive months.

Sharply lower residential property approval growth of +2.8% in Sept 17 vs +13.8% in Aug 17 and a sharp plunge in auto loans approvals (-15.9% yoy) were the key reasons behind the lower loan approvals trend in Sept 17.

Despite the positive growth in residential property loan approvals of late (vs contraction in 2016), the lag effect from the progress drawdown would only give rise to some form of positive loans growth recovery towards 1H19.