Leading indicators registered marginal declines. Loans applications growth turned in a
negative 2.7% growth in January 2012 (December 2011: +10.7%), the first YoY
decline in five months since August 2011. Loans approved also declined
marginally by 2.9% in January 2012 from an 11.3% rise in the previous
month.
Propped up largely by the corporate segment. Loans
applications and approvals were led by the corporate segment, with an estimated
growth of 28.9% and 78.1%, respectively. In contrast, the household segment’s
applications and approvals fell 20.6% and 27.7%, respectively in January. We believe this was due to two main factors:
(1) Implementation of the new Responsible Lending Guideline, which came into
effect on 1 January 2012; and (2) extended holiday season effect, with the
Chinese New Year on 23 January 2012 falling close to the year-end period.
Uptick in overall gross impaired loans overall, but
relatively marginal. Overall gross
impaired loans recorded an uptick of 1.3% MoM, after posting a 1.1% MoM decline
in December 2011. There were increases across the board for the corporate
segment, but the uptick was marginal ranging from between 0.8% and 4.0%
MoM.
Likely due to seasonal effect. For retail impaired loans
segment, there were also some increases in the auto segment, residential
property, personal use, credit cards and consumer durables, but again the
upticks were quite marginal ranging between 1% and 6% MoM. We believe this was
likely caused by historically slower repayments during the school holiday and
festive season spending. Given that upticks are quite marginal, we believe
these should not give rise to any major cause for alarm.
No conclusive evidence yet. January’s banking statistics
suggest likely weaknesses in leading loan indicators as well as selected gross
impaired loans. However, we believe
there could be some seasonal impact as well, due to the festive Chinese
New Year period, which means that the January 2012 data is not yet sufficiently
conclusive of a much slower trend ahead.
Gross impaired loans have seen some upticks, but these are not significant.
Thus, we continue to believe there should be no major cause for alarm.
Overweight. Our
sector rating is still OVERWEIGHT, with BUYs now being AFG, CIMB, HLBB,
Maybank, MBSB and PBB. Our top big-cap pick is now PBB, as we foresee a
sustainable rise in dividend, and it remains as
the prime beneficiary of a changeover to full FRS139 accounting basis.
HLBB remains as our top mid-cap pick, with further upgrades likely given its
strong execution on merger synergies. AFG is now our top pick in the small cap
space, given a marginal retracement in share price, with its latest quarterly
results providing a strong basis for further earnings upgrades ahead.
Source: AmeSecurites
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