KUALA LUMPUR: Loan growth expanded by 5.8 per cent compared to the same period last year in February 2024, showing resilience despite softer loan indicators, said CIMB Securities Sdn Bhd.
This marks a slight increase from January's 5.7 per cent year-on-year (YoY) growth.
CIMB Securities noted that it is higher than the domestic loan growth forecast of 5.3 per cent for 2024.
"The growth is quite good, considering that February was naturally a short working month, compounded by the festive holiday season this year."Annualised loan growth was also higher at 4.2 per cent in February 2024, compared to the 3.0 per cent rate in January 2024, signalling stronger sequential growth," it said.
"Stripping off the CNY base effect, loan applications grew 11 per cent YoY in February 2024. "Similarly, loans approved contracted a decrease of 18 per cent YoY in February, vs. 40 per cent YoY in January 2024," CIMB Securities said.
However, it said without the CNY effect, February 2024's loans would have expanded 7 per cent YoY.
"All in, loan demand indicators remained healthy, taking into consideration the base effect from the festive season," the firm noted.
Gross impaired loans moved up by 0.8 per cent or RM287 million month-on-month (mom) in February 2024 (January 2024:
-0.5 per cent mom or -RM187 million mom), after five consecutive months of improvement.
However, this is likely due to temporary effects from festive season. Gross impaired loans ratio remained quite low and unchanged at 1.6 per cent in February 2024.
Loan loss cover was still above 90 per cent, with February 2024's level at 92.4 per cent.
CIMB Securities maintained an 'Overweight' rating on the sector.
Malayan Banking Bhd (Maybank) is one of its top picks for its potential as a strong source of non-interest investment income among big caps.
AMMB Holdings Bhd was another pick for its potential in generating good trading income and benefiting from lower fixed deposit costs and Alliance Bank Malaysia Bhd (ABMB) was singled out for its healthy loan growth.