Banking (Financial Services)
Banking Sector - Jan-25 Banking Stats: Lending Rates Continue to Compress
Mon, 03-Mar-2025 06:33 am
by Samuel Woo • Apex Research

Summary

  • Positives: (1) Resilient loan growth, driven by business loans, (2) Leading indicators are up once again, (3) Considerable improvement in system GIL ratio.

  • Negatives: (1) Lending rates continue to compress, (2) Deposit growth rates dragged by CASA compression.

  • Other things of note: (1) GIL ratio has risen slightly again, following Dec-24’s considerable improvement, (2) FD rates flattish.

  • Maintain OVERWEIGHT call. Top pick: Public Bank (BUY; FV: RM5.43) and CIMB (BUY; FV: RM8.99).

 

Loan growth +5.7% yoy / +0.4% mom

Loan growth remains resilient, with both retail and business loans stable.

  •  Retail loans: +6.7% yoy / +0.6% mom

    • Extremely consistent, as per usual.

  •  Business loans: +4.4% yoy /+0.1% mom

    • Business loans show pickup.

 

Leading indicators

After a lull seen in Dec-24, loan applications numbers are up once again.

  • Approval rate: 42%.

 

► Deposits +3.1% yoy / +0.2% mom

Deposit growth is rather slow this month, dragged by a mom decline in FDs.

  •  FD growth: +4.2% yoy / +0.2% mom 

  • CASA growth: +3.2% yoy / -0.5% mom 

 

  • LCR: 157%. 

  • Loan/Deposit ratio: 92.2%. 

 

► GIL ratio 1.46% / +2bps mom

Some uptick in multiple categories, after significant GIL ratio decline seen in Dec-24.

  •  Notable deteriorations, mom: Personal financing, +7bps, Credit cards +3bps.

  •  Notable improvements, mom: -

 

Interest rates

Lending rates continue to compress – but FD rates remain flattish.

  • ► FD rates (Conv.): Flattish

  • ► FD rates (Isl.): Slight decline.

  • ▼ Lending rates: Continues to compress – this time by -5bps mom.

 

Keeping OVERWEIGHT stance. We continue to favour the banking sector’s outlook, premised on robust loan growth, ideal conditions for NOII (particularly for fee income), and significant recoveries and writebacks expected in several banks. Our top picks include Public Bank (BUY; FV: RM5.43) and CIMB (BUY; FV: RM8.99).

Recommendation: Overweight
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Market Mover
Settlement Rates
Currency Buy Rates (RM) Sell Rates (RM)
USD 4.420886 4.455517
EUR 4.777422 4.786296
CNY 0.609704 0.610870
HKD 0.568233 0.572913
SGD 3.295156 3.321155