BANK LENDING GROWTH TO REMAIN STRONG THIS YEAR, SAYS PUBLIC BANK

KUALA LUMPUR, March 1 (Bernama) -- Growth in bank lending is expected to remain strong this year on healthy loan demand, a sustainable economic recovery and ample credit supply, says Public Bank Bhd.

It said loan demand from households and businesses is expected to remain healthy due to rising incomes, high sales of motor vehicles and property transactions as well as low borrowing costs.

Public Bank said Bank Negara (central bank) Malaysia's monetary policy is expected to remain accommodative to support economic activity.

Household gearing is also expected to remain within prudential levels, helped by rising incomes, high domestic savings and low interest rates, it said in the Public Bank Economic Review, a bi-monthly publication, released today.

Public Bank said the rising trend in private capital expenditure would be reinforced by various factors such as the ongoing recovery in the global economy, high capacity utilisation in the manufacturing sector, the Economic Transformation Programme (ETP) and 10th Malaysia Plan (10MP) implementation.

The lending growth will also be supported by a sustained recovery of the Malaysian economy, given its strong fundamentals and broad-based economic structure, Public Bank said.

"In terms of gross domestic product (GDP) growth, the economy is expected to expand by more than five per cent this year, supported by sustained domestic demand and also a further recovery in external demand," it added.

Public Bank also said the supply of credit should remain ample this year as the banking system is on solid footing due to its strong capitalisation, strong asset quality and strong profitability.

"With steady growth in customer deposits, the banking system should remain liquid with a healthy loan-to-deposit ratio.

"Banks in Malaysia will continue to compete for household and business loans to grow their balance sheets," it added.