The total loan amount
of RM1,108.0b for 2012 grew +10.4% on a YoY basis, which came in slightly below
our estimate of a 11%-13% growth rate.
There was slower growth in business loan, which was mainly due to the
weaker growth pace in the construction sector of +10.6% YoY (vs. Nov12: +12.6%)
and manufacturing of +3.6% YoY (vs. Nov12: 5.0%). On a YoY basis, there was also a continuous weakening of the growth
momentum in household loans as well, due likely to the impact from the
Responsible Finance policy. That said, loans to households did grow at a higher
rate in December12 at +11.4% YoY (vs. Nov12: +6.6%) largely driven by the hire-purchase
loan growth of +7.0% YoY (vs. Nov12: +6.6%), mortgage at +15.8% YoY (vs. Nov12:
+16.0%) and credit card at +1.8% YoY (vs. Nov12: +1.2%).
Full year loan growth
was marginally below our expectations. The 2012 banking industry loan growth
dipped further from 2011, easing by 78bps to 10.4% at RM1,108.0m and came in
slightly below our expectations. This was largely due to the weakening growth
in both the business and household lending.
We expect the growth rate to ease further for 2013.
The full-year slower growth in the household loan of +11.4%
(vs. Nov12: +11.6%) was mainly attributable to loan for properties. Mortgage
loan growth slowed from 16.0% in the preceding month to 15.8% in Dec12.
However, there were minor improvements in hire purchase and credit card loans
in the month with growth of +7.0% YoY (vs. Nov12: +6.6%) and +1.8% YoY (vs.
Nov12: +1.2%) respectively.
The business loan growth was lower at 9.2% YoY compared with
the 10.6% recorded in Nov12, dragging by two major sectors in the business loan
segment, namely; construction and anufacturing. The growth rates in both the
sectors fell to 10.6% (vs. Nov12: +12.6%) and 3.6% (vs. Nov12: +5.0%) YoY,
respectively.
First ever dip in
loan disbursement. Loan disbursement shrank by 7.9% YoY in December versus
the positive growth in Dec11. Loan application again showed a decline of -15.5%
in Dec12 vs. -18% in Nov12. This was largely due to the decreased loan applications
in the manufacturing and household segments. There was also a significant
decline in loan approvals of -20.7% YoY (vs. -3.2% YoY in Nov12). On the
overall, the indicators are showing
signs of a further slowdown in the loan growth momentum.
Deposit growth also
slowed to +8.3% YoY. Total deposit in 2012 was at RM1408.3b, rising a slower
+8.3% YoY (vs. +11.15% in Nov12). The fall of 285bps was because of the decline
in fixed deposit, foreign exchange and other deposits. The loan-to-deposit
ratio meanwhile has risen marginally by 30bps from 78.4% in Nov12 to 78.7% in
Dec12.
Minor increase in
interest spread. The 3-month deposit rate remained intact at 2.98% and the average lending rate for the year
achieved 4.7%. Interest spread surged from 1.67% in the previous month to 1.72%
in Dec12. However, we still expect an overall margin compression in 2013 by
10-20bps based on historical.
Healthy asset quality
as a whole. In Dec12, impaired assets reached RM22.1b with a net impaired ratio
of 1.40%. The negative trend was mainly due to the tightened lending rules
implemented by BNM. Loan loss coverage
dived 100.9% in Dec12 vs. the 101.9% in Nov12. The overall provision to total
loan for the year hit 2.0%. Asset quality improved in banking industry 2012.
2013 Outlook. Given our view that the Responsible Finance
policy will continue to promote a healthier albeit slower household lending
portfolio growth, the momentum of the system loan growth will hence likely be
lower for 2013.
Our base case estimate for the system loan growth for 2013
is in the range of 9%-10%, or 1%-2% lower than 2012. Together with the ongoing
interest margins headwind, there are limited pportunities to drive the earnings
growth for banks materially beyond our current expectation of a high
single-digit to low-teen growth.
In addition, with the already mid-cycle valuation, we
believe that a valuation multiple expansion is also unlikely. Hence, we are
increasingly looking to thematic plays within the banking sector to search for outperformers
in 2013.
We are maintaining
our OVERWEIGHT call on the sector. We have OUTPERFORM calls on MAYBANK (TP:
RM10.40), RHBCAP (TP: RM8.30), CIMB (TP: RM8.20), AMMB (TP: RM7.40), AFFIN (TP:
RM4.40) and BIMB (TP: RM3.60). AFG (TP: RM4.00), PBBANK (TP: RM16.80), and
HLBANK (TP: RM15.20) are rated on MARKET PERFORM ratings.
Source: Kenanga
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