RHB Research has maintained an “Overweight” sector in the Banking Sector with Hong Leong Bank And Malayan Banking (Maybank as its top picks.
It said that Loan disbursements to businesses reached record levels in Apr 2022 as economic activities picked up, supporting the 5.0% YoY system loans growth.
RHB also saw sustained demand for credit, as applications added 4.5% YoY on a 3-month moving average (3MA) basis. CASA deposits rose 10.1% YoY, which could further support financing growth during the year. Our system loans growth forecast for 2022 is maintained at +5.2%
RHB said that April 2022 saw a surge in loan disbursements to businesses, which grew 19.4% YoY on a 3MA basis.
This was in tandem with the pick-up in economic activities following the full reopening of the economy on 1 Apr. The biggest beneficiary of the higher disbursements was the wholesale & retail trade sector, which gained 25.1% YoY (MoM: +9.0%).
As a whole, lending indicators remain encouraging, with applications and approvals also recording YoY and MoM increases.
On April 2022 average lending rate (ALR) stood at 3.56%, up from the previous month’s 3.48% (Apr 2021: 3.45%), bringing the lending spread to 2.00% (Mar 2022: 1.92%, Apr 2021: 1.89%).
It said that the overnight policy rate (OPR) hike in May 2022, coupled with expectations of a further 25bps increase in 2H22, should increase lending and deposit rates. Historically, a 25bps OPR hike would add around 15bps to fixed deposit rates and ALR, with no significant time lag.
