PETALING JAYA: Industry observers and analysts on the whole are confident of encouraging loan growth and more merger and acquisition (M&A) activities this year, although the repercussions from the prudent lending guideline is believed to likely cause further moderation in loan growth to the household sector.
“Slower loan growth in the household sector is a welcome development, as the level of household debt remains elevated, at 80.5% of gross domestic product, the highest in at least a decade,” said Malaysian Rating Corp Bhd (MARC) chief economist Nor Zahidi Alias. “Tempering households’ enthusiasm for taking loans is necessary in my view, as an overstretched household balance sheet would pose a risk to the consumer segment, a sector that has become an important pillar to the Malaysian economy since the Asian Financial Crisis.
Thus far, MARC noted that loans to the household sector had slowed to an average of 11.8% in 2012, compared with an average of 12.9% in 2011.
Loans for the purchase of residential properties, said Zahidi, would likely remain robust, however, even though efforts had been made to reduce the exposure of certain segment of borrowers to this sector.
This was due to the fact that home prices had remained elevated and were expected to remain high due to strong demand, especially in the Klang Valley, Penang, Johor and Negri Sembilan, he said.
However, he felt loan growth for consumption credit (ie, credit card and personal loans) had moderated and would likely remain softer this year, as the impact of stricter guidelines continue to bite.