Monday March 26, 2012
Banks’ estimates on loan growth differ from consensus
By YAP LENG KUEN
PETALING JAYA: There is a gap between management guidance and consensus for loan growth the challenge for banks is to ensure that their loan growth targets for this year are met.
“Many investment professionals continue to retain their cautious stance on the banking sector with expectations of intensified competition, single-digit loan growth and continued pressure on net interest margin (NIM),'' said analyst Cheah King Yoong of Alliance Research.
However, in a recent sector update on banking, Cheah had put the average industry loan growth this year at 11% with competition in the sector expected to subside and NIM to bottom out this year.
Looking at just retail loans, Standard Chartered Bank Malaysia projects retail loan growth at single digit; however, there are other growth triggers for corporate loan growth.
“Bank Negara's new guidelines have some impact as we are seeing a general slowdown in retail loans,'' said Tiew Siew Chuen, country head of consumer banking, Standard Chartered Bank Malaysia. “However, the Economic Transformation Programme (ETP) continues to be a positive trigger to the sector.''
Standard Chartered registered loan growth of 13.5% year-on-year between June 2010 and June 2011.
“We expect the small and medium enterprises (SME) sector to capitalise on the ETP and sustain domestic demand. If economic indicators remain favourable, we forecast double-digit growth for our SME sector,'' she told StarBiz.
The Public Bank group expects its loan growth rate to sustain at a double-digit low teens, with accomodative interest rates and implementation of projects under the ETP supporting the demand for loans.
“The group is confident it can achieve its loan growth target based on its competitive pricing, fast turnaround time for loan approvals and disbursement, loyal customer base and wide branch network,'' said chairman Tan Sri Teh Hong Piow in an email reply.
Last year, the Public Bank group grew its total gross loans by 13.5% to RM177.7bil with domestic loan growth stronger at 14.1% compared with industry growth rate of 13.6%.
Loans to the SME sector grew by 13.8%.
The Public Bank group has the largest market share of residential properties and passenger vehicle hire-purchase financing in Malaysia at 18.1% (previous: 17.4%) and 25.9% (25.5%) respectively as at end of last year.
In residential properties, the group sees continued demand for affordable mid-range homes which form the bulk of its profile; it expects to maintain its leading position in the passenger vehicle hire-purchase sector with competitive financing packages and fast turnaround time.
“The group is also confident that demand for financing by SMEs will continue to expand, supported by healthy domestic demand,'' said Teh, adding that business loans would get a boost from ETP projects.
“However, weak global growth prospects, exacerbated by the sovereign debt problems in Europe and lingering concerns in the US economy are likely to impact economc growth in Malaysia, which could weigh on demand for loans this year.
“Despite the expected moderation in eocnomic growth this year, the group is confident of maintaining its track record for superior asset quality by having in place a rigorous credit risk management infrastructure and prudent lending policies,'' Teh said, adding that gross impaired loan ratio was expected to remain stable at below 1%.
RHB Bank Bhd expects loan growth at about 12%, with bridge financing for corporates under ETP projects taking the lead.
The RHB Bank group achieved 16% loan growth last year compared with the industry rate of 13%.
This year, the mortgage loan segment is likely to experience a moderate slowdown, given slowing property sales particularly for high-end properties, said Johari.
“For motor vehicles, we expect demand for hire-purchase loans in the first half to stay soft although we see prospects for stronger volumes in the second half due to increase in car sales volumes with new car models hitting the market.
“For business and trade financing, it will be affected by a slower growth in global trade as well as the local economy. However, loans to the corporate/business sector, particularly for construction companies, will likely pick up in the second half as the implementation of ETP projects gain traction,'' said Johari.