PETALING JAYA: Malaysian banks generally saw an acceleration in loans growth as lockdowns were eased and the broader economy reopened at the end of last year.

       According to AmInvestment Bank Research, this trend carried forward into January where domestic loans growth averaged at 4.7% year-on-year (y-o-y) driven by a pick-up in the pace of household loans and stronger momentum for working capital financing.

       The banking sector’s overall loan growth for the fourth quarter of 2021 accelerated to 5% y-o-y compared to a 3.7% y-o-y growth in the third quarter.

       Among the banks, the research house noted that Malayan Banking Bhd’s (Maybank) loan growth gained traction to register a 5.7% y-o-y growth in the fourth quarter of 2021.

       “CIMB Group Holdings Bhd’s gross loans grew at a faster rate of 3.3% y-o-y supported by growth in consumer, commercial and wholesale banking loans,” it said.

       For RHB Bank Bhd, the research house said their loans had expanded by 6.7% y-o-y driven by mortgages, hire purchase, small and medium enterprises, commercial loans and growth in the Singapore segment’s loans.

       RHB’s domestic loans had grown by 4.8% y-o-y, slightly outpacing the industry’s 4.5% y-o-y growth.

       AmInvestment Bank Research also noted that there was a slight rise in the gross impaired loans ratio for the banks that were under its coverage to 1.75% in the fourth quarter from 1.70% in the third quarter.

       “The percentages of bank loans that were under repayment assistance declined with a high percentage of borrowers for the expired repayment assistance loans in Jan 2022 who made repayments,” it said.

       “Applications for the Urus financial assistance programme has been extended to end-March 2022. Nevertheless, the take-up rate for the programme stayed low.

       “We continue to see provisions tapering based on the declining trend of outstanding loans that required repayment assistance and the improving asset quality outlook for banks,” it noted.

       Meanwhile, on the earnings front, the research house said that the sector’s calendarised core earnings growth for 2022 is now revised to a growth of 9.6% from 10% before largely after adjusting its net interest margins and credit cost assumptions for banks.

       It is also expecting for earnings growth for banks under its coverage to be flattish at 0.8% for 2022 due to the additional taxes from Cukai Makmur.

       “We retain our overweight stance on the sector with the interest rate uptrend benefitting interest income of banks with lower provisions ahead supported by the potential reversals of management overlays from an improving trend of loans under repayment assistance,” it said.