Sector Update

01 August 2016

Banking

NEUTRAL

BNM Stats (June 2016) Momentum Still Downwards

By Ahmad Ramzani Ramli l ahmadramzani@kenanga.com.my

In June, loans growth continued to decelerate and asset quality has deteriorated slightly on YoY
basis. However, the improved annualized loans growth has reinforced our expectations of loans
growth of 5-6% for 2016 supporting by the recent cut in OPR. We maintain our NEUTRAL stance on
the sector with no clear catalysts in sight internally nor externally. CIMB is our only OUTPERFORM
call in the banking universe while the others are rated as MARKET PERFORM.
No let-up in system loans growth with all segments continuing to decelerate but
annualized growth surged ahead. June 2016 system loans growth slowed further
(+5.6% YoY vs. May 16: +6.2% YoY) with both household and business segments
moderating from the previous month. The former moderated at +7.1% YoY (May 16:
+7.3% YoY) while the latter was slower at +4.2% YoY (May 16: 5.1% YoY). Essentially,
the slower growth was caused by higher loan repayments (Ytd-16: +2.3% YoY) which
outpaced the decline in loan disbursements (Ytd-16: -5.1% YoY). When annualised,
industry loans advanced 2.8% YoY (vs. May 16: +2.2% YoY), still below our expectation of
5-6% for 2016. However, the surge in annualized growth suggested the likelihood of a
gradual pickup ahead boosted by the cut in OPR recently.
Both Loan Applications and Approvals fell. Leading indicators showed a blip in
momentum for June as loan applications were slower at +3.9% YoY (vs. May 16: +8.9%
YoY) as demand for business loan was flat at +12.8% YoY (vs. May 16: +12.8% YoY)
with a fall in demand for household loan at -5.2% YoY (vs. April 16: +5.5%). The fall in demand for household loans was
exacerbated by: (i) demand decline for passenger cars (-0.8% YoY vs. May 16: +0.5% YoY), ii) lower demand for property
financing, which fell 7.1% YoY from a growth of 7.1% YoY in May, and (iii) further fall in personal use at 23.6% YoY (vs May 16:
-17.1% YoY). Compounding the fall in demand was the fall in approvals by 21% vs. May 16 of +2.2% as the approval rate for
business loan fell by 25.9% YoY vs. Mays rise of 12.5% YoY while household loan approvals declined further by 15.0% vs.
Mays fall of 9.0%. The fall in household approvals was again led by decline in approvals for purchase of residential property
and passenger cars of 20.1% YoY and 8.1% YoY, respectively (May 16: -11.2% YoY and -14.0% YoY, respectively). Overall
system loan approval rate (MoM) slowed by 4ppts in June to 39.9% and for YTD it was slower by 40bps to 41.5%.
Asset quality deteriorated and LLC regressed YoY. On a YoY basis, asset quality deteriorated as system net impaired loans
ratio went up by 3bps to 1.27% due to net impaired loans outpacing loans growth at +8.5% YoY vs. +5.6% YoY. The business
segment led the way in deterioration as its impaired loans moderated +12.4% YoY (vs. May 16: +14.4% YoY) and the
household segment slowed to +0.7% YoY (vs May 16: +1.9% YoY). The business segment saw slower deterioration
underpinned by slower impairments in purchase of non-residential property and construction at +24.5% YoY and +38.4% YoY,
respectively (May 16: +32.0% YoY and +39.5% YoY respectively). The moderate rise in impairments in the household segment
was capped by a moderate rise in impairments in purchase of residential property at 1.0% YoY (May 16: +3.1% YoY) and a fall
in purchase of passenger cars at 15.5% (May 16: -13.8%). On a MoM basis, net impaired loans ratio deteriorated by 2bps to
1.27%. Meanwhile, loan loss coverage deteriorated YoY to 89.5% (-1.7ppts MoM and -8.0ppts YoY) as impaired loans grew at
+8.1% YoY while provisioning fell by 0.8%.
Excess liquidity continued to narrow MoM and interest spread tightened MoM. System deposits continued to decline in
June albeit slower (-0.5% YoY vs. May 16: -0.4% YoY) compared to system loans growth (+5.6% YoY vs. May 16: +6.2% YoY).
Hence, the industry loan-deposit-ratio rose marginally by 21bps MoM to 87.5%. Likewise, with falling deposits, excess liquidity
to total deposit base fell 20bps to 12.5% MoM. However, the percentage of current account and savings account (CASA)
improved slightly by 40bps to 25.9% MoM, thanks to improvement in savings deposits by +3.8% (May 16: +3.4%). The interest
spread between average lending rate (ALR) and 3-month fixed deposit rate (FDR) was up by 6bps to 1.48% where the former
was up by 6bps to 4.61% and the latter was flat 3.13%, respectively. We expect the spread to constrict moving forward (as
banks have revised downwards their lending rates) and continue to be tight as liquidity is still narrow; thus, stiff price-based
competition will continue to plague the market.
No change in our NEUTRAL stance. We reiterate our NEUTRAL call on the sector. We see no change in our views on the
structural and cyclical headwinds such as; (i) moderate economy, (ii) moderate loans growth, (iii) constricting liquidity
environment, (iv) narrowing NIM, (v) weak capital market activities, and (v) higher credit costs, plaguing the banking industry.
Furthermore, there are no concrete catalysts and/or any game changers going forward. The improved annualised loans growth
indicates loan growth is trending upwards and will be supported by the cut in OPR recently.
We have only an OUTPERFORM call for CIMB. We see value in CIMB with its Fwd. PBV trading at 0.9x compared to the
industrys Fwd. PBV of 1.5x. The rest of banking stocks under our coverage are rated as MARKET PERFORM.

PP7004/02/2013(031762)

Page 1 of 10

Banking

Sector Update

01 August 2016

Fig 1: Industry Loan Growth by Breakdown

Fig 2: Industry Loans Growth by Economic Purpose

16.0%

30.0%

14.0%

25.0%

12.0%

20.0%

10.0%

15.0%

8.0%
6.0%

10.0%

4.0%

5.0%

2.0%

0.0%

Business Loans

Household Loans

Total Loans

Working capital
Passenger cars

Non-residential property
Construction

Residential property

Source: BNM, Kenanga Research

Fig 3: Industry Loan Applications Growth by Breakdown

Fig 4: Industry Loan Application Growth by Economic Purpose

80.0%
140.0%
120.0%
100.0%
80.0%
60.0%
40.0%
20.0%
0.0%
-20.0%
-40.0%
-60.0%
-80.0%

60.0%
40.0%
20.0%
0.0%
-20.0%
-40.0%

Business Loan

Household Loan

Working capital
Passenger Cars

Total Loans Applied

Non-residential Property
Construction

Residential Property

Source: BNM, Kenanga Research

Fig 5: Loan Approvals Rate by Breakdown

Fig 6: Loan Approvals Rate by Economic Purpose

105.0%

90.0%

95.0%
85.0%

80.0%

75.0%
70.0%

65.0%
55.0%

60.0%

45.0%
50.0%

35.0%
25.0%

40.0%

15.0%
5.0%

30.0%

Business Loan

Household Loan

Total Loans Approved Rate

Working capital

Non-residential property

Passenger cars

Construction

Residential property

Source: BNM, Kenanga Research

PP7004/02/2013(031762)

Page 2 of 10

Banking

Sector Update

01 August 2016
Fig 8: Impaired loans ratio breakdown

Fig 7: Impaired Loans Growth Rate Breakdown

10.00%

80.0%

9.00%
60.0%

8.00%
7.00%

40.0%

6.00%
5.00%

20.0%

4.00%
0.0%

3.00%
2.00%

-20.0%

Working capital
Passenger cars

Non-residential property
Construction

May-16

Jan-16

Mar-16

Nov-15

Jul-15

Sep-15

May-15

Jan-15

Mar-15

Nov-14

Jul-14

Sep-14

May-14

Jan-14

Mar-14

Nov-13

Jul-13

Sep-13

May-13

Jan-13

Mar-13

Nov-12

Jul-12

Sep-12

May-12

Jan-12

Mar-12

1.00%
-40.0%

0.00%

Residential property

Working capital
Passenger cars

Non-residential property
Construction

Residential property

Source: BNM, Kenanga Research

Fig 9: Industry Net Impaired Loans Ratio

Fig 10: Industry Loan Loss Reserve

45,000

3.5%

40,000

3.0%

110.0%
105.0%
100.0%
95.0%
2.5%

35,000

90.0%
85.0%
80.0%

2.0%

30,000

75.0%
70.0%
65.0%

20,000

1.0%

60.0%

Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16

1.5%

Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16

25,000

Loan Loss Reserve

Total Impaired Loan

Net Impaired Loan Ratio (%)

Source: BNM, Kenanga Research

Fig 11: Industry Loan Disbursements

Fig 12: Industry Loan Repayment

120,000

80%

120,000

40.0%

70%
100,000

60%

30.0%

100,000

50%

20.0%

80,000
40%

80,000
10.0%

30%
60,000
20%

60,000
0.0%

10%
40,000

40,000
0%
-10%

20,000

-10.0%

20,000

-20.0%

-20%

Total Disbursed

Growth Rate (% YoY)

-30.0%
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16

Apr-16

Oct-15

Jan-16

Jul-15

Apr-15

Oct-14

Jan-15

Jul-14

Apr-14

Oct-13

Jan-14

Jul-13

Apr-13

Oct-12

Jan-13

Jul-12

Apr-12

Oct-11

Jan-12

Jul-11

Apr-11

Oct-10

Jan-11

Jul-10

Apr-10

Oct-09

Jan-10

Jul-09

Apr-09

Oct-08

Jan-09

Jul-08

Apr-08

-30%
Jan-08

Total Repaid (RM'm)

Growth Rate (% YoY)

Source: BNM, Kenanga Research

PP7004/02/2013(031762)

Page 3 of 10

Banking

Sector Update

01 August 2016
Fig 13: Industry Deposits

Fig 14: Industry Excess Liquidity

1,800,000

16%

330,000

29%

14%

310,000

27%

290,000

25%

270,000

23%

250,000

21%

230,000

19%

210,000

17%

190,000

15%

2%

170,000

13%

0%

150,000

11%

1,600,000
12%

1,400,000

10%

8%
1,200,000
6%

1,000,000

4%

Total Deposits (RM'm)

Apr-16

Jan-16

Jul-15

Oct-15

Apr-15

Jul-14

Oct-14

Jan-15

Apr-14

Jan-14

Jul-13

Oct-13

Apr-13

Jan-13

Jul-12

Oct-12

Apr-12

Jul-11

Oct-11

Jan-12

Apr-11

Jan-11

Jul-10

Oct-10

Apr-10

-2%

Jan-10

600,000

Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16

800,000

Excess Liquidity (RM'm)

% Excess Liquidity/Total Deposits

Growth Rate (% YoY)

Source: BNM, Kenanga Research

Fig 15: Loan to Deposit Ratio

Fig 16: CASA

1,800.00

500.00

30.0%

88.0%

450.00

25.0%

86.0%

400.00

90.0%

1,600.00
1,400.00

84.0%

20.0%

350.00

82.0%

1,200.00
1,000.00

300.00

78.0%

250.00

76.0%

800.00

74.0%

600.00

72.0%

Total loans (RMbn)

Total deposits (RMbn)

15.0%

80.0%

Loan-to-Deposit ratio (%)

10.0%

200.00

5.0%

150.00

0.0%

CASA (RMbn)

Excess liquidity (RMbn)

CASA/Total Deposit (%)

% Excess Liquidity/Total Deposits

Source: BNM, Kenanga Research

Fig 17: Interest Rate Spread
4.0 (%)
3.5
3.0
2.5
2.0
1.5

Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16

1.0

Interest Spread (Average Lending Rate - 3Mth FDR)

Source: BNM, Kenanga Research

PP7004/02/2013(031762)

Page 4 of 10

Banking

Sector Update

01 August 2016
Table 1: Breakdown of Industry Loans
Jun-16

May-16

% MoM

Jun-15

% YoY

Dec-15

% Ytd

347,169.2

346,962.3

0.1%

328,437.1

5.7%

349,173.1

-0.6%

Purchase of fixed assets other

than land and building

9,859.5

9,638.4

2.3%

10,379.1

-5.0%

10,060.0

-2.0%

Purchase of securities

70,645.9

71,123.4

-0.7%

75,602.9

-6.6%

75,185.1

-6.0%

Purchase of transport vehicles

8,947.4

8,816.2

1.5%

9,562.1

-6.4%

9,128.7

-2.0%

Other purpose

64,035.9

63,338.7

1.1%

64,589.5

-0.9%

64,338.3

-0.5%

Purchase of non-residential
property

203,273.9

201,796.5

0.7%

189,938.2

7.0%

196,990.7

3.2%

Construction

44,313.9

43,860.8

1.0%

39,754.0

11.5%

42,656.1

3.9%

Business Loan

748,245.6

745,536.2

0.4%

718,262.9

4.2%

747,532.1

0.1%

Purchase of residential property

457,401.1

453,879.3

0.8%

414,568.0

10.3%

437,035.4

4.7%

Purchase of passenger cars

159,260.2

159,359.1

-0.1%

158,672.4

0.4%

160,681.8

-0.9%

Personal use

64,837.9

64,584.1

0.4%

61,319.5

5.7%

63,701.9

1.8%

Credit card

35,324.0

35,017.4

0.9%

34,723.0

1.7%

36,043.9

-2.0%

140.2

139.9

0.2%

148.8

-5.8%

144.2

-2.8%

Household Loan

716,963.4

712,979.9

0.6%

669,431.7

7.1%

697,607.2

2.8%

Total Loans Outstanding

1,465,209

1,458,516

0.5%

1,387,695

5.6%

1,445,139

1.4%

RMm
Working capital

Purchase of consumer durables

Source: BNM
Table 2: Breakdown of Industry Loan Applications

RMm

Jun-16

May-16

% MoM

Jun-15

% YoY

Ytd-15

Ytd-14

% YoY

Working capital

18,452.4

19,066.3

-3.2%

20,787.8

-11.2%

101,796.5

90,767.3

12.2%

502.6

3,704.7

-86.4%

338.9

48.3%

5,695.2

3,322.7

71.4%

3,409.5

2,623.1

30.0%

1,951.4

74.7%

15,126.8

17,739.9

-14.7%

580.0

232.4

149.5%

290.2

99.9%

2,278.6

2,110.8

8.0%

Other purpose

5,138.1

2,654.7

93.5%

1,705.0

201.3%

21,578.5

15,109.6

42.8%

Purchase of non-residential
property

7,034.1

7,117.2

-1.2%

8,382.0

-16.1%

39,478.6

49,368.5

-20.0%

Construction

6,545.4

3,471.6

88.5%

3,471.4

88.6%

20,993.4

20,333.4

3.2%

Business Loan

41,662.2

38,870.0

7.2%

36,926.8

12.8%

206,947.7

198,752.2

4.1%

Purchase of residential property

17,932.3

18,670.9

-4.0%

19,296.8

-7.1%

101,353.1

101,889.7

-0.5%

Purchase of passenger cars

7,811.7

6,209.0

25.8%

7,878.5

-0.8%

39,072.7

42,770.4

-8.6%

Personal use

4,687.8

4,480.6

4.6%

6,133.9

-23.6%

31,515.9

28,878.3

9.1%

Credit card

4,125.3

4,094.0

0.8%

3,146.9

31.1%

21,590.0

14,399.3

49.9%

0.1

0.0

80.0%

0.7

-88.8%

29.3

68.3

-57.1%

Household Loan

34,557.3

33,454.5

3.3%

36,456.9

-5.2%

193,560.9

188,005.9

3.0%

Total Loans Applied

76,219.5

72,324.5

5.4%

73,383.6

3.9%

400,508.7

386,758.1

3.6%

Purchase of fixed assets other

than land and building
Purchase of securities
Purchase of transport vehicles

Purchase of consumer durables

Source: BNM

PP7004/02/2013(031762)

Page 5 of 10

Banking

Sector Update

01 August 2016

Table 3: Breakdown of Industry Loan Approvals

RMm

Jun-16

May-16

% MoM

Jun-15

% YoY

Ytd-16

Ytd-15

% YoY

Working capital

6,940.3

9,309.2

-25.4%

11,568.5

-40.0%

41,344.4

44,627.7

-7.4%

360.3

319.8

12.7%

198.9

81.2%

1,550.4

2,958.3

-47.6%

1,781.3

1,975.0

-9.8%

1,421.2

25.3%

9,386.9

12,198.0

-23.0%

544.8

287.1

89.8%

182.3

198.8%

2,098.3

1,482.8

41.5%

Other purpose

1,185.9

1,815.3

-34.7%

2,855.3

-58.5%

11,076.6

10,802.5

2.5%

Purchase of non-residential
property

3,260.9

2,309.8

41.2%

3,396.4

-4.0%

15,567.9

21,720.9

-28.3%

Construction

1,457.5

2,362.2

-38.3%

1,347.2

8.2%

7,173.4

9,123.3

-21.4%

Business Loan

15,531.0

18,378.1

-15.5%

20,969.9

-25.9%

88,197.9

102,913.5

-14.3%

Purchase of residential property

8,007.4

7,603.2

5.3%

10,025.0

-20.1%

41,579.0

52,730.0

-21.1%

Purchase of passenger cars

3,901.1

3,145.2

24.0%

4,242.9

-8.1%

19,920.5

24,886.0

-20.0%

Personal use

1,483.7

1,382.0

7.4%

1,577.9

-6.0%

8,101.7

8,273.3

-2.1%

Credit card

1,503.6

1,487.1

1.1%

1,684.2

-10.7%

8,399.4

7,683.2

9.3%

0.1

0.5

-80.7%

0.3

-64.4%

28.0

37.6

-25.6%

Household Loan

14,895.9

13,617.9

9.4%

17,530.3

-15.0%

78,028.6

93,610.0

-16.6%

Total Loans Approved

30,426.9

31,996.1

-4.9%

38,500.1

-21.0%

166,226.6

196,523.5

-15.4%

Purchase of fixed assets other

than land and building
Purchase of securities
Purchase of transport vehicles

Purchase of consumer durables

Source: BNM
Table 4: Breakdown of Industry Loan Approvals Rate

RMm

Jun-16

May-16

Ytd-16

Ytd-15

Working capital

37.6%

48.8%

40.6%

41.3%

Purchase of fixed assets other than land and

building

71.7%

8.6%

27.2%

22.9%

Purchase of securities

52.2%

75.3%

62.1%

64.9%

Purchase of transport vehicles

93.9%

123.5%

92.1%

91.5%

Other purpose

23.1%

68.4%

51.3%

60.2%

Purchase of non-residential property

46.4%

32.5%

39.4%

37.9%

Construction

22.3%

68.0%

34.2%

39.6%

Business Loan

37.3%

47.3%

42.6%

44.0%

Purchase of residential property

44.7%

40.7%

41.0%

40.2%

Purchase of passenger cars

49.9%

50.7%

51.0%

51.2%

Personal use

31.7%

30.8%

25.7%

24.7%

Credit card

36.4%

36.3%

38.9%

39.5%

Purchase of consumer durables

116.0%

1082.2%

95.4%

95.4%

Household Loan

43.1%

40.7%

40.3%

39.7%

Total Loans Approval Rate

39.9%

44.2%

41.5%

41.9%

Source: BNM

PP7004/02/2013(031762)

Page 6 of 10

Banking

Sector Update

01 August 2016

Table 5: Breakdown of Industry Loan Disbursements

RMm

Jun-16

May-16

% MoM

Jun-15

% YoY

Ytd-15

Ytd-14

% YoY

51,863.2

54,164.9

-4.2%

56,763.6

-8.6%

305,983.6

299,550.3

2.1%

643.3

187.9

242.3%

482.8

33.2%

1,663.1

2,134.7

-22.1%

Purchase of securities

1,880.0

2,373.6

-20.8%

1,577.8

19.2%

13,284.3

14,347.3

-7.4%

Purchase of transport
vehicles

584.4

590.8

-1.1%

460.5

26.9%

2,694.5

2,860.8

-5.8%

Other purpose

4,853.1

3,862.2

25.7%

7,821.1

-37.9%

29,386.8

28,637.3

2.6%

Purchase of non-residential
property

4,180.7

3,419.0

22.3%

5,005.4

-16.5%

23,115.3

29,333.0

-21.2%

Construction

2,584.8

2,099.5

23.1%

2,823.0

-8.4%

13,544.9

16,558.8

-18.2%

Business Loan

66,589.5

66,697.9

-0.2%

74,934.2

-11.1%

389,672.4

393,422.2

-1.0%

Purchase of residential
property

6,937.7

6,854.1

1.2%

7,937.2

-12.6%

42,080.7

46,251.3

-9.0%

Purchase of passenger cars

3,620.0

3,114.7

16.2%

3,987.8

-9.2%

19,741.9

23,151.5

-14.7%

Personal use

2,562.4

2,516.1

1.8%

2,444.8

4.8%

14,109.2

14,722.1

-4.2%

Credit card

9,052.4

9,326.8

-2.9%

8,911.8

1.6%

54,821.6

53,411.1

2.6%

3.8

4.0

-4.3%

8.7

-56.3%

23.9

221.7

-89.2%

Household Loan

22,176.3

21,815.6

1.7%

23,290.3

-4.8%

130,777.3

137,757.8

-5.1%

Total Loans Disbursed

88,765.8

88,513.6

0.3%

98,224.4

-9.6%

520,449.7

531,180.0

-2.0%

Working capital
Purchase of fixed assets
other than land and building

Purchase of consumer
durables

Source: BNM
Table 6: Breakdown of Total Deposits by Holder
Jun-16

May-16

% MoM

Jun-15

% YoY

Dec-15

% Ytd

Federal Government

21,602.4

19,588.8

10.3%

23,117.7

-6.6%

15,564.1

38.8%

State Government

35,252.8

35,131.0

0.3%

33,777.3

4.4%

32,580.8

8.2%

Statutory authorities

47,405.0

49,049.8

-3.4%

47,020.6

0.8%

44,049.1

7.6%

Financial institutions

281,992.9

278,330.8

1.3%

311,849.4

-9.6%

288,778.6

-2.3%

Business enterprises

555,909.3

560,194.6

-0.8%

560,504.1

-0.8%

574,515.8

-3.2%

Individuals

632,217.8

628,584.5

0.6%

605,833.3

4.4%

612,053.7

3.3%

Others

100,691.0

100,546.5

0.1%

101,915.4

-1.2%

103,529.2

-2.7%

1,675,071.2

1,651,837.2

1.4%

1,684,017.8

-0.5%

1,671,071.2

0.2%

RMm

Total Deposits by Holder (RM'm)

Source: BNM

PP7004/02/2013(031762)

Page 7 of 10

Banking

Sector Update

01 August 2016

Table 7: Breakdown of Industry Loan Repayments

RMm

Jun-16

May-16

% MoM

Jun-15

% YoY

Ytd-16

Ytd-15

% YoY

51,519.2

49,951.2

3.1%

51,047.3

0.9%

307,325.8

287,522.5

6.9%

354.8

349.8

1.4%

625.5

-43.3%

2,033.8

2,230.5

-8.8%

2,294.0

2,248.2

2.0%

2,093.2

9.6%

17,641.5

15,041.3

17.3%

597.9

522.3

14.5%

562.6

6.3%

3,138.3

3,077.4

2.0%

Other purpose

4,020.4

3,040.3

32.2%

6,348.3

-36.7%

28,992.9

31,082.2

-6.7%

Purchase of non-residential
property

3,430.6

3,757.9

-8.7%

3,705.7

-7.4%

21,835.2

22,474.3

-2.8%

Construction

2,325.5

2,176.2

6.9%

2,956.1

-21.3%

12,311.6

16,384.3

-24.9%

Business Loan

64,542.4

62,045.8

4.0%

67,338.6

-4.2%

393,279.1

377,812.4

4.1%

Purchase of residential
property

4,695.3

5,024.2

-6.5%

4,656.0

0.8%

28,995.4

28,494.2

1.8%

Purchase of passenger cars

3,851.7

4,008.7

-3.9%

3,755.5

2.6%

23,028.4

22,285.9

3.3%

Personal use

2,220.4

2,368.8

-6.3%

2,282.2

-2.7%

13,537.3

13,669.2

-1.0%

Credit card

9,478.3

9,779.1

-3.1%

9,216.4

2.8%

58,429.9

56,610.6

3.2%

3.8

5.4

-29.8%

6.5

-41.5%

29.6

115.6

-74.4%

20,249.5

21,186.3

-4.4%

19,916.5

1.7%

124,020.6

121,175.6

2.3%

84,791.9

83,232.1

1.9%

87,255.1

-2.8%

517,299.7

498,988.0

3.7%

Working capital
Purchase of fixed assets other
than land and building
Purchase of securities
Purchase of transport vehicles

Purchase of consumer
durables
Household Loan
Total Loans Repaid (RM'm)
Source: BNM
Table 8: Breakdown of Impaired Loans

RMm

Jun-16

May-16

% MoM

Jun-15

% YoY

Dec-15

% Ytd

Working capital

8,723.6

8,174.0

6.7%

8,182.6

6.6%

8,432.0

3.5%

Purchase of fixed assets other

than land and building

105.6

125.9

-16.2%

162.3

-35.0%

174.7

-39.6%

Purchase of securities

409.9

416.8

-1.6%

376.0

9.0%

372.9

9.9%

Purchase of transport vehicles

243.1

250.0

-2.8%

125.5

93.7%

103.8

134.3%

Other purpose

1,201.1

1,256.7

-4.4%

1,401.7

-14.3%

1,522.3

-21.1%

Purchase of non-residential
property

2,023.0

2,045.2

-1.1%

1,625.2

24.5%

1,786.5

13.2%

Construction

3,367.9

3,306.6

1.9%

2,434.0

38.4%

2,494.4

35.0%

Business Loan

16,074.2

15,575.2

3.2%

14,307.2

12.4%

14,886.6

8.0%

Purchase of residential property

5,107.3

5,143.6

-0.7%

5,056.2

1.0%

5,030.2

1.5%

Purchase of passenger cars

1,404.3

1,525.1

-7.9%

1,661.6

-15.5%

1,512.8

-7.2%

Personal use

1,228.9

1,270.6

-3.3%

1,000.6

22.8%

1,191.7

3.1%

483.9

487.2

-0.7%

447.5

8.1%

479.8

0.9%

2.2

1.7

29.1%

2.1

4.3%

1.4

48.7%

Household Loan

8,226.5

8,428.2

-2.4%

8,168.0

0.7%

8,216.0

0.1%

Total Non-Performing Loans

24,300.7

24,003.4

1.2%

22,475.3

8.1%

23,102.5

5.2%

Credit card
Purchase of consumer durables

Source: BNM

PP7004/02/2013(031762)

Page 8 of 10

Banking

Sector Update

01 August 2016

Peer Comparison
Price
(29 Jul
2016)

Mkt Cap

(RM)

(RMm)

FY14/15

FY15/16

Affin Holdings

2.13

4,138.5

11.3

Alliance Financial Group

3.98

6,068.9

11.4

AMMB Holdings

4.30

12,961.0

8.0

BIMB Holdings

4.04

6,418.3

11.7

CIMB Group

4.39

38,319.7

Hong Leong Bank

13.12

26,924.4

Malayan Banking

8.02

Public Bank

19.50

RHB Bank

5.09

NAME

Est.
Div.
Yld.

Fwd
ROE

P/BV

FY16/17

(%)

(%)

(x)

FY14/15

FY15/16

FY16/17

FY15/16

FY16/17

(RM)

Rating

10.0

9.9

4.0

4.8

0.5

365.5

412.2

417.4

12.8

1.3

2.23

MP

11.6

11.1

4.2

10.9

1.2

530.8

522.1

545.0

-1.6

4.4

4.04

MP

10.0

9.0

4.8

8.6

0.8

1,617.5

1,302.2

1,437.3

-19.5

10.4

4.63

MP

10.9

11.1

3.7

13.5

1.8

547.5

590.2

577.7

7.8

-2.1

4.18

MP

13.4

11.7

10.1

3.5

8.0

0.9

2,849.5

3,261.5

3,786.2

14.5

16.1

4.87

OP

12.1

15.0

13.4

3.1

10.1

1.4

2,233.1

1,795.0

2,012.7

-19.6

12.1

13.45

MP

80,270.8

11.7

12.7

11.6

5.5

10.1

1.2

6,835.9

6,335.1

6,895.2

-7.3

8.8

9.07

MP

75,299.1

14.9

15.1

14.2

2.8

15.8

2.4

5,062.2

4,993.0

5,287.7

-1.4

5.9

20.05

MP

20,411.1

14.1

10.9

9.4

2.0

10.3

1.0

1,448.4

1,873.5

2,170.3

29.3

15.8

6.51

MP

270,811.8

12.9

13.1

12.0

3.8

11.3

1.5

-0.8

9.5

PER (x)

Net Profit Growth

(%)

Net Profit (RMm)

Target Price

Banking

Mkt. Cap Weighted Average

Non-Bank Money Lender
AEON Credit Service (M)

14.20

2,044.8

9.0

8.5

8.0

4.5

21.3

2.2

228.2

241.4

255.8

5.8

6.0

15.12

OP

Malaysia Building Society

0.69

4,001.2

15.5

26.2

20.0

1.4

3.0

0.5

257.6

152.6

200.3

-40.8

31.3

1.11

UP

6,046.0

13.3

20.2

15.9

2.5

9.2

1.1

-25.0

22.7

Mkt. Cap Weighted Average

Source: Bloomberg, Kenanga Research

PP7004/02/2013(031762)

Page 9 of 10

Banking

Sector Update

01 August 2016
Stock Ratings are defined as follows:
Stock Recommendations
OUTPERFORM
MARKET PERFORM
UNDERPERFORM

: A particular stocks Expected Total Return is MORE than 10% (an approximation to the
5-year annualised Total Return of FBMKLCI of 10.2%).
: A particular stocks Expected Total Return is WITHIN the range of 3% to 10%.
: A particular stocks Expected Total Return is LESS than 3% (an approximation to the
12-month Fixed Deposit Rate of 3.15% as a proxy to Risk-Free Rate).

Sector Recommendations***
OVERWEIGHT
NEUTRAL
UNDERWEIGHT

: A particular sectors Expected Total Return is MORE than 10% (an approximation to the
5-year annualised Total Return of FBMKLCI of 10.2%).
: A particular sectors Expected Total Return is WITHIN the range of 3% to 10%.
: A particular sectors Expected Total Return is LESS than 3% (an approximation to the
12-month Fixed Deposit Rate of 3.15% as a proxy to Risk-Free Rate).

***Sector recommendations are defined based on market capitalisation weighted average expected total
return for stocks under our coverage.

This document has been prepared for general circulation based on information obtained from sources believed to be reliable but we do not
make any representations as to its accuracy or completeness. Any recommendation contained in this document does not have regard to
the specific investment objectives, financial situation and the particular needs of any specific person who may read this document. This
document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees.
Kenanga Investment Bank Berhad accepts no liability whatsoever for any direct or consequential loss arising from any use of this document
or any solicitations of an offer to buy or sell any securities. Kenanga Investment Bank Berhad and its associates, their directors, and/or
employees may have positions in, and may effect transactions in securities mentioned herein from time to time in the open market or
otherwise, and may receive brokerage fees or act as principal or agent in dealings with respect to these companies.
Published and printed by:
KENANGA INVESTMENT BANK BERHAD (15678-H)
8th Floor, Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia
Telephone: (603) 2166 6822 Facsimile: (603) 2166 6823 Website: www.kenanga.com.my

PP7004/02/2013(031762)

Chan Ken Yew

Head of Research

Page 10 of 10