Ending on a high note
Industry loan growth ended the year 2021 above expectations, expanding 4.5% YoY against our forecast of 3.8%, as momentum gathered pace in the last two months of the year, following the end to the lockdowns. Amid expectations of faster economic growth, we raise our 2022 industry loan growth forecast to 4.9% from 4.0% and maintain our POSITIVE outlook on the sector. BUYs are AMMB, ABMB, BIMB, HLBK and RHB.
Pick-up in non-HH loan growth
Industry loan growth was 4.5% in 2021 (3.4% in 2020), picking-up pace in the last few months of the year with the opening up of the economy. Household loan growth was a slower 4.3% (5.0% in 2020) but non-HH loan growth compensated with faster growth of 4.9% (1.0% in 2020). Private debt securities issuances rose 8% YoY, taking total credit growth to 5.0% in 2022.
Loan applications rise due to pent-up demand
On a 3-month moving average basis (3M MA), loan applications rose 17.8% YoY, driven by pent-up demand post lockdown. Positively, working capital loan applications on a 3M MA basis jumped 20.8% YoY from just +2.0% YoY in Nov 2021, having contracted over the past 13 consecutive months from Sep 2020 to Sep 2021.
Liquidity remains more than ample
Deposit growth picked up pace to 5.8% YoY from 3.9% YoY in Dec 2020, outpacing loan growth of 4.5% YoY. CASA growth held up at 10.9% YoY versus 11.1% YoY in Nov 2021 but the pace was slower than the rate of 19.3% YoY reported in Dec 2020. The industry’s CASA ratio was 31.6% endDec 2021. On a separate note, inflation remained persistently high at 3.2% in Dec 2021. As a result, the negative real return on deposits was -1.6% in Dec 2021.