KUALA LUMPUR: Research houses have maintained their “positive” and “overweight” view on the banking sector and are projecting loan growth of 5.5% to 6% for this year.
Maybank Investment Bank Bhd (Maybank IB) said the industry loan growth is estimated at 5.5% in 2025, supported by an expected GDP growth of 4.9%.
“This aligns with industry loan growth of 5.5% in 2024, which met expectations. We anticipate faster non-household loan growth, driven by an expected investment upcycle, to offset a moderation in household loan growth,” Maybank IB said in a research note yesterday.
The bank highlighted that higher investment flows in 2023 and 2024 are expected to translate into increased economic activity in 2025.
Additionally, it said rising demand for loans related to land, industrial buildings, factories, and shophouses, as well as a surge in working capital loan applications, indicate a strengthening investment cycle.
“These factors suggest an upturn in Malaysia’s investment cycle 2025, benefitting larger banks that are more active in the corporate lending and capital market space such as Maybank, CIMB, AMMB and RHB,” it added.
Separately, Kenanga Investment Bank Bhd (Kenanga IB) has maintained an overweight call on the banking sector, forecasting industry loan growth at 6%, driven primarily by Johor-based projects.
However, it expects deposit growth to remain muted at 3%, as banks are less likely to engage in aggressive competition for liquidity in the near term.
“Despite less favourable news flows from the technology sector, we opine that the sector’s fundamentals remain intact. This is mainly due to the absence of previously distortive provisions and writebacks from pandemic overlays,” Kenanga IB said.
The bank attributes the projected 6% loan growth to ongoing developments in Johor’s Special Economic Zone and expanding data centre projects, supported by a stable overnight policy rate of 3% expected throughout the year.
“We hold a deposits growth target of 3%, as we reckon banks will not aggressively increase their offered rates in the near term. A lower funding cost structure benefits retail-centric banks as corporate wholesale deposits typically demand more competitive rates,“ it noted.
Echoing this sentiment, Hong Leong Investment Bank Bhd remains bullish on the banking sector despite the lukewarm data print.
“We believe the sector could emerge as a key winner in an emerging market rotational play. This could be driven by the unwinding of high long-run inflation expectations in America, a strong US dollar, and elevated treasury yields, which we see as having downside risks.
“Additionally, the market has yet to factor in the impact of lower oil prices and artificial intelligence-driven productivity gains,” it said.
