4.7% YoY loan growth in Jan
Pick-up in demand
With the reopening of the economy, loan demand is steadily rising, partly from a low base, and was up 4.7% YoY in Jan 2022. Banks have generally been guiding for faster loan growth this year and our industry loan growth forecast currently stands at 4.9% against 4.5% in 2021. The trailing off of CASA growth would correspond to banks’ guidance of stable to a slight contraction in NIMs this year, barring rate increases. POSITIVE still, with BUYs on AMMB, HLBK, ABMB, HLFG, BIMB and RHB.
Demand amid economic reopening
Industry loan growth was marginally faster at 4.7% YoY in Jan 2022, as compared to 4.5% in 2021, driven by pent-up demand following the reopening of the economy. Household loan growth was 4.7% YoY while non-HH loan growth was 4.6% YoY. Including private debt securities issuances, total credit growth was 5.2% in Jan 2022.
CASA growth moderating
Deposit growth was a slower 5.3% YoY in Jan 2022 compared with 5.8% YoY in Dec 2021. CASA growth slowed to less than 10% (at 8.3% YoY in Jan 2022), easing further from the red-hot pace set in in 2020 and 2021. Banks have generally been guiding for stable to a slight contraction in NIMs this year, as low-cost funding tapers off. The industry’s CASA ratio was 32% end-Jan 2022.
Absolute impaired loans 6% lower YoY
Impaired loans declined 6% YoY in absolute terms, in Jan 2022. YoY declines were notable in auto (-31% YoY), personal (-16%) and credit card (-16%) financing. Housing GILs rose but at a marginal pace of 3% YoY. The industry’s gross impaired loans (GIL) ratio was stable at 1.45%.