Malaysia’s monetary indicators moderated in April, but credit demand and lending activity continued to strengthen, signalling resilience in the domestic economy despite ongoing geopolitical uncertainties, according to Hong Leong Investment Bank (HLIB).
In a research note, HLIB said narrow money supply (M1) growth eased to 9.8% year-on-year in April from 11.4% in March, while broad money supply (M3) slowed to 5.0% from 5.5% previously. Reserve money remained in contraction, although at a slower pace of 2.7% compared with a 3.1% decline in March.
Despite the moderation in liquidity growth, lending indicators improved across the board. Loan applications surged 18.4% year-on-year in April, up from 12.0% in March, while loan approvals increased 14.6% from 12.7%. Loan disbursements also accelerated to 10.4%, more than double March’s 4.8% growth.
The stronger lending momentum was driven by both households and businesses.
Business loan growth rose to 6.3% year-on-year from 5.7% previously, supported by stronger borrowing from the wholesale and retail trade, information and communication, and financial services sectors.
Meanwhile, household loan growth remained steady at 5.2%, underpinned by continued demand for residential properties and passenger vehicles.
Total banking system loan growth edged up to 5.6% in April from 5.4% in March.
On the funding side, deposit growth moderated to 3.4% year-on-year from 4.2% previously, reflecting slower growth in business and foreign deposits. However, household deposits improved to 2.0% from 1.4% in March.
The gap between household loans and deposits widened slightly as household borrowing continued to outpace savings growth.
Loan applications from households rebounded sharply, growing 10.6% compared with just 0.3% in March. Demand was driven mainly by personal financing, housing loans and vehicle financing.
Business loan applications remained robust, rising 28.2%, led by the electricity and utilities sector, financial services, real estate activities and construction.
Loan approvals also strengthened significantly, with household approvals rebounding 14.3% after contracting 3.5% in March, helping offset slower growth in business loan approvals.
Meanwhile, Malaysia’s corporate bond market remained active, with gross bond issuances holding steady at RM12.68 billion in April, supported by fundraising activities from the financial services, construction and manufacturing sectors.
Foreign appetite for Malaysian fixed-income assets moderated during the month. Foreign investors recorded net inflows of RM100 million into Malaysian bonds, sharply lower than RM3.3 billion in March, amid concerns over higher energy prices and geopolitical tensions.
However, foreign investors returned as net buyers of Malaysian equities, recording net purchases of RM500 million compared with net selling of RM100 million in March.
Looking ahead, HLIB said Malaysia’s domestic economy remains supported by resilient credit growth, healthy economic fundamentals and ongoing fiscal policy measures.
Nevertheless, the research house cautioned that risks to growth remain, particularly from global energy supply disruptions linked to tensions around the Strait of Hormuz and broader geopolitical developments.
Despite these uncertainties, HLIB maintained its 2026 gross domestic product growth forecast of 4.5%, citing continued resilience in domestic demand and economic activity.
