KUALA LUMPUR, April 3 (Bernama) -- Bursa Malaysia ended lower today, with the benchmark index declining 0.5 per cent, weighed down by selected heavyweights led by Press Metal, IHH Healthcare, and Tenaga Nasional. Press Metal shed 16 sen to RM4.87, IHH Healthcare dipped 14 sen to RM6.75, and TNB slipped 18 sen to RM13.58. These stocks resulted in a 6.12-point decline in the benchmark index. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) slid 7.61 points to 1,518.91 versus Wednesday’s close of 1,526.52. The benchmark index opened 9.22 points lower at 1,517.30 and fluctuated between 1,512.32 and 1,524.41 throughout the day. In the broader market, losers thumped gainers 548 to 357, while 448 counters were unchanged, 994 untraded and eight suspended. Turnover rose to 2.51 billion units valued at RM1.81 billion against Wednesday’s 2.37 billion units valued at RM2.03 billion. ...
On Wednesday (2nd March), Macquarie Equities Research (MER) released a research report, discussing data on the loan and deposit growth for Malaysia for the month of January. The report highlighted that the overall non-performing loans (NPL) in Malaysia increased 0.8%, mainly contributed by real estate & construction and auto financing. MER also expressed their defensive view on the Malaysian banks while stating Public Bank as their top pick in Malaysia.
Read on excerpts from the report titled “Singapore loans contracted while Malaysia asset quality worsened” below…
Event
• Bank Negara Malaysia (BNM) released loan and deposit growth data for Malaysia for January 2016.
• In Malaysia, asset quality trends were negative. Non-performing loans (NPLs) increased 0.8% MoM mainly driven by real estate & construction, and auto financing. The uptick in real estate & construction NPL was mainly due to slowdown in property sales leading to cash flow problems for property developers. NPL coverage ratio continued to decline, as banks did not build up provisions during the month.
Impact
• Key takeaways for Malaysia – Total system loan growth in January 2016 was 7.7% YoY (0.1% MoM) which compares to system deposit growth of only 0.9% YoY (-0.8% MoM). The interesting points in January 2016 were: (i) NPLs for real estate & construction was up 14.0% MoM, bringing the NPL ratio for that segment to the highest level since 2012; (ii) NPL for auto financing loans increased 10.5% MoM, while unsecured loans continued their uptrend for 5 consecutive months; and, (iii) the NPL coverage ratio declined 60bp MoM to 95.6%, which is worrying at this stage of the credit cycle.
Outlook
• MER believes asset quality trends – rather than topline growth – will be the share price driver for banks going forward. MER has a strong preference for banks with a strong asset quality track record and a quality balance sheet.
• In Malaysia, MER is defensively positioned and have Public Bank as MER’s top pick, due to its strong asset quality track record, quality balance sheet and strong cost efficiency profile.
Source: Macquarie Research - 04 Mar 2016
Read on excerpts from the report titled “Singapore loans contracted while Malaysia asset quality worsened” below…
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| Public Bank Bhd |
• Bank Negara Malaysia (BNM) released loan and deposit growth data for Malaysia for January 2016.
• In Malaysia, asset quality trends were negative. Non-performing loans (NPLs) increased 0.8% MoM mainly driven by real estate & construction, and auto financing. The uptick in real estate & construction NPL was mainly due to slowdown in property sales leading to cash flow problems for property developers. NPL coverage ratio continued to decline, as banks did not build up provisions during the month.
Impact
• Key takeaways for Malaysia – Total system loan growth in January 2016 was 7.7% YoY (0.1% MoM) which compares to system deposit growth of only 0.9% YoY (-0.8% MoM). The interesting points in January 2016 were: (i) NPLs for real estate & construction was up 14.0% MoM, bringing the NPL ratio for that segment to the highest level since 2012; (ii) NPL for auto financing loans increased 10.5% MoM, while unsecured loans continued their uptrend for 5 consecutive months; and, (iii) the NPL coverage ratio declined 60bp MoM to 95.6%, which is worrying at this stage of the credit cycle.
Outlook
• MER believes asset quality trends – rather than topline growth – will be the share price driver for banks going forward. MER has a strong preference for banks with a strong asset quality track record and a quality balance sheet.
• In Malaysia, MER is defensively positioned and have Public Bank as MER’s top pick, due to its strong asset quality track record, quality balance sheet and strong cost efficiency profile.
Source: Macquarie Research - 04 Mar 2016
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