PETALING JAYA: Banking sector loans kicked off 2019 with a 5.5% year-on-year growth in January, underpinned by sectors like manufacturing, retail, business services, construction and households (residential properties, personal use, credit cards).
With less than a month to go before the first quarter (Q1) comes to an end, AffinHwang Capital expects loan growth to be slow in the first three months of 2019, in tandem with slower business activities due to the seasonal effect of the Chinese New Year. It maintained its neutral sector stance, with Maybank and Aeon Credit Service (M) Bhd as its top picks.
“For 2019, we keep our loan growth target of 5% unchanged, noting that loan disbursements may gradually taper down due to a more cautious business and consumer outlook in 2019, largely dampened by external factors. The downside risks are largely supported by our strong economic fundamentals – resilient consumer spending, business growth and low unemployment rate, of which are holding up. Longer term, with new government policies after the Budget 2019 announcement, we expect consumer sentiment to gradually improve and drive consumption spending,” said AffinHwang Capital.
Macquarie Research is overweight on banks on resilient fundamentals and capital optimisation. It prefers corporate banks (Maybank, RHB, AMMB Holdings) over retail-centric Public Bank Bhd and Hong Leong Bank Bhd.
The banking sector accounts for about 32% of weightage in Bursa Malaysia’s benchmark FBM KLCI, hence the sector’s prospects would provide an indication of the performance for the index.
According to Bank Negara Malaysia, the local financial sector is envisioned to grow beyond its role as an enabler of growth to be a key driver and catalyst of economic growth, with growth in the financial system firmly anchored to growth in the real sector.
Source: The Sun Daily