Banking Sector Poised For Strong Loan Growth On Infra Projects, JS-SEZ, Renewable Energy Investments – MIDF

KUALA LUMPUR, April 2 (Bernama) -- The banking sector’s loan growth prospects remain strong, buoyed by a combination of major infrastructure projects like the Johor-Singapore Special Economic Zone and renewable energy investments, said MIDF Amanah Investment Bank Bhd.

“Growth will pick up again soon. Banks remain pretty optimistic about 2025’s balance sheet prospects,” it said in a note today.

It was reported that the industry’s February 2025 loan growth moderated to 5.2 per cent year-on-year (y-o-y) from 5.7 per cent in January 2025.

Household (HH) loan growth was stable at six per cent y-o-y but non-HH loan growth slowed to 4.1 per cent y-o-y from 5.1 per cent in January 2025.

Despite banks not reaching their highs of 2024 this year, their stable earnings, solid loan growth prospects, and high dividend yields may be an investor’s safe haven given the frequency of geopolitical and economic shocks, especially at the current post-selldown valuations, MIDF Amanah said.

“Our house does not expect a full-blown global recession but ongoing fears provide the largest downside risk to share prices,” it said.

Kenanga Investment Bank Bhd, meanwhile, believes the banking sector is poised to show resilience on the back of a supportive Malaysian economy with most banks giving guidance for stronger loans growth this year.

“Readings for the coming months are expected to be mixed due to festive behaviour, which could blur signals spurred by macroeconomic factors such as unfavourable trade policies,” it said.

Maybank Investment Bank Bhd is keeping its full-year industry loan growth forecast at 5.5 per cent, backed by a pick-up in corporate lending.

This will buffer expectation of more moderate household loan growth amid potential inflationary pressures, it added.

MIDF Amanah and Maybank Investment have a positive outlook while Kenanga Investment is “overweight” on the sector.

-- BERNAMA