Malaysia's slowing household loan growth drags 2016 industry forecast

Loan growth is forecast at 6.5%.

Maybank Kim Eng maintains its industry loan growth forecast of 6.5% for 2016, which is premised on a further slowdown in household loan growth to 6.1% and non-HH loan growth to 7.0%.

Here's more from Maybank Kim Eng:

Industry loan growth picked up pace in the final month of 2015 to end the year at 7.9% (slowing from 9.3% in 2014), in line with our forecast of 7.8%. The industry’s loan/deposit ratio (LDR) was restated to exclude financing funded by Investment Accounts and rose marginally to 88.7% from 88.3% end-Nov 2015 as total deposit growth slowed further in Dec 2015 to just 1.8% YoY from 3.2% YoY end-Nov 2015.

Foreign currency deposits jumped 45% YoY in Dec 2015, making up 8% of total deposits. Absolute NPLs rose at a slightly faster pace of 4.2% YoY in Dec 2015 (2.1% YoY end-Nov 2015) but the industry’s gross NPL ratio was stable at 1.60%.

Loan loss coverage slipped to 96.2% from 97.2% end-Nov 2015. Positively, PDS issuances jumped in Dec 2015 to MYR23.9b from MYR7.0b in Nov. As such, 2015 caught up to 2014 with total PDS issuances of MYR85.1b.

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