BNM’s
end-June12 statistics indicate that the banking industry continues to perform.
Loan growth rose 12.6% YoY, an increase of 13bps from May 2012. The banking
system remains flushed with liquidity as loan-to-deposit ratio of June12 increased
by 3 bps from last month’s 78.5%. With an unutilised deposit amount of
RM292.8b, the system is able to support ETP-related infrastructure projects and
capital market activities such as large IPOs (upcoming is Astro), and increasing
share market trading volume. Despite the lending indicators showing a slowdown
compared to last month, we still believe that loan growth will be able to
outperform our industry forecast for 2012E.
Continued growing. Growth in household loans and business loans
were the strongest contributors to the overall growth. Total loans expanded
12.6% YoY to RM1,067b and 4.3% QoQ in June 2012. On an annualized basis, the
total loans grew 12.7%, which is in line with our 11.0%-13.0% growth forecast
for 2012E.
Loans to households grew at a steady rate of
11.9% YoY, parallel
to the stabilising mortgage loan growth at +18.1% YoY (May 2012: +19.3% YoY)
and improving hire purchase loans growth of +6.9% YoY (May 2012: +6.6% YoY).
Business loans growth continued their momentum by achieving an increase of
13.6% YoY from +13.4% YoY in May. This was driven by the recent increase of ETP
project deals being awarded. On the
other hand, the credit card loan growth continues to decline to 4.6% YoY from
4.9% in April12. Lending indicators contracted in June12, nonetheless. Despite
a strong comeback in May12, lending indicators normalised in June on a YoY
basis. June loan applications normalised to 10.5% from May’s 13.6%. The fall in
loan applications was due to the decrease in loan demand from the household
sector and financial intermediation, partially due to the effect from the
introduction of the responsible lending guidelines by BNM earlier. With most banks
already configuring themselves to comply with the rules, we expect the growth
in household loans to continue to normalise in the near future.
Deposits growth looking good at 12.6%.
The 12.6% YoY growth in total deposit was due to the 10.1% increased in
fixed deposits and 11.2% increase in demand deposits. With the total deposits
hovering around the 12%-14% level, the LDR was stable at 78.5%. Gross impaired
loans continued to be at the all-time low.
The gross impaired loans ratio decreased to 2.2% as compared to May12’s
2.3%, which is a decrease of RM1.82b from May12. We see this as a positive
trend as it showed that the banking system is able to finance all the loans and
projects, especially with the current ETP projects rollouts.
Can the industry outperform? All in all, based on the BNM June12
Monthly Statistics Report, there are strong indications that the banking system
will be able to support the lending and capital market activities with local
funding. The loan-to-deposit ratio has been climbing since November 2011 to
78.5% with the unutilised deposits at RM292.8b. This excess liquidity will be
able to support ETP-related infrastructure projects like the MRT project. With
the first phase of the MRT project moving into active phase as well as other new
ETP deals being awarded (George Ken-Lion Pacific JV’s LRT RM960.0m extension, MRCB-Nusa’s
RM1.0b link, etc.), we are very optimistic that the banking system will be able
to fully finance the overall ETP projects without putting any stress on the
local banking system liquidity. Having already achieved a 12.6% loan growth
this month, we believe that the banking industry will be able to outperform our
industry loan growth forecast of 11%-13% despite a slightly weaker set of
lending indicators.
We are maintaining our OVERWEIGHT call on the
sector. We have
OUTPERFORM calls on MAYBANK (TP: RM10.40), PBBANK (TP: RM15.60), RHBCAP (TP:
RM9.60), CIMB (TP: RM8.50), AMMB (TP: RM6.70), AFFIN (TP: RM4.30) and BIMB (TP:
RM3.60). AFG (TP: RM4.00) and HLBANK (TP: RM10.90) are both rated as MARKET PERFORM.
Source: Kenanga
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