Banking Sector To Gradually Improve This Year, Says Sunway Varsity Don

By Zairina Zainudin KUALA LUMPUR, Jan 3 (Bernama) -- The banking sector is poised to gradually improve this year, thanks to its stable fundamentals. Sunway University's Business School Economics Professor Dr Yeah Kim Leng said the stable fundamentals were reflected in the sector's strong capital adequacy, satisfactory asset quality, ample liquidity and reasonable profitability. "Following cost-cutting and business realignments in some banks in 2015 and 2016, we expect the industry to be better positioned to provide more loans this year, particularly to the business and small and medium enterprise segments," he told Bernama. Yeah anticipated a six to seven per cent growth in loans this year on the back of a modest uptick in economic growth, business and consumer demand and lenders' confidence. Meanwhile, RHB Research Institute said loan growth was expected to slow down to around to 3.7 per cent this year from an estimated 4.3 per cent in 2016 and 7.9 per cent in 2015. "This is on account of slower household loans due to more stringent lending rules and curbs on the property market, and moderating business loans from weakening economic growth," the research house said in a note Tuesday. It said in November 2016, loan growth gained pace to 5.3 per cent year-on-year (yoy) compared to 4.5 per cent yoy in October 2016, supported by a pick-up in corporate loans, while household loans remained stable during the month. It said corporate loans grew at a quicker pace of 4.6 per cent yoy in November 2016 and 2.9 per cent yoy in October 2016, mainly due to a pick-up in loans extended to the wholesale and retail sectors, as well as, a smaller decline in loans extended to the manufacturing sector. The research house said a rebound in loans extended to the transportation and storage sectors also helped the performance. On household sector loans, RHB Research said, they remained stable at 5.4 per cent yoy in November 2016, unchanged from the previous month. Research firm, Affin Hwang Capital Research, has maintained its loan growth projection for this year of 4.2 per cent, based on 4.6 per cent growth from the household sector and 3.7 per cent from the business sector. The strength in the domestic economy, sufficient liquidity in the banking system and an accommodative monetary policy would continue to support loan growth, it said. Affin Hwang Capital has kept its 'neutral' recommendation on the banking sector. -- BERNAMA