Asian markets plunged on Wednesday, led by a dramatic selloff in South Korea, as investors rushed to unwind chipmaker bets amid rising fears that a prolonged Middle East war could trigger a sustained energy shock. South Korea Triggers Circuit Breaker KOSPI Index slumped more than 11%, prompting a circuit breaker. Two-day losses widened to 17% — the steepest since 2009 . The Korean won dropped to a 17-year low , compounding market stress. Elsewhere: Nikkei 225 fell 4.3% Taiwan stocks dropped 3.6% S&P 500 futures slipped 0.6% Key Point: Heavy profit-taking in semiconductor stocks amplified the regional selloff. Chipmakers had been among the hottest trades in recent months, driven by AI demand. Investors are now cashing out of crowded positions. Oil Surge Drives Inflation Fears Brent crude rose more than 13% this week to US$82.08 per barrel. Prices retreated slightly after Donald Trump ordered insurance guarantees for Gulf shipping and signalle...
Malaysia’s banking sector started 2026 on stable footing, but analysts are increasingly cautious as loan momentum shows early signs of moderation.
Loan Growth Holds Near 5%
System loan growth stayed close to 5% year-on-year (y-o-y) in January, according to HLIB Research.
Breakdown of lending trends:
Household loans: ~5% y-o-y
Supported by strong residential mortgages and hire purchase financing
Business loans: Moderated to ~4% y-o-y
Weaker capital expenditure and working capital demand
Loan approvals rebounded sharply, rising nearly 27% y-o-y, driven by business credit demand of around 42%.
Key Point: Loan growth remains steady, supported by household lending, but business momentum is softening.
Deposits and Margins
Deposit growth eased to nearly 3% y-o-y, dragged by weaker fixed deposits and foreign currency savings.
However:
Current and savings account (CASA) growth rose 8% y-o-y
Banks continued optimising funding costs to protect yields
Net interest margins narrowed slightly to around 2% as lending yields fell faster than deposit rates.
HLIB expects margins to stabilise once asset-liability repricing effects subside.
Asset Quality Still Resilient
The sector’s gross impaired loans (GIL) ratio stayed well cushioned at nearly 1%.
Household GIL: ~1%
Business GIL: ~2%
Management overlays continue to provide buffer against potential deterioration.
Key Point: Asset quality remains stable, but SME stress is starting to emerge.
Analysts Flag Slowing Momentum
MBSB Research highlighted emerging risks:
SME loan growth slowed to ~5% (from 6%)
Working capital loans grew only 0.8% y-o-y — weakest in nearly two years
Unsecured retail loans declined
SME GIL ratio rose to nearly 3%
Approval rates slipped to 51% from 63% in December, signalling weaker loan appetite.
Top Picks
HLIB maintains an “overweight” call, favouring:
Malayan Banking Bhd
CIMB Group Holdings Bhd
AMMB Holdings Bhd
Alliance Bank Malaysia Bhd
MBSB Research prefers:
Hong Leong Bank Bhd
AMMB Holdings Bhd
Analysts cite dividend prospects, capital optimisation and improving liquidity as supportive factors.
Outlook
While headline loan growth remains stable, leading indicators suggest momentum may soften in coming months, particularly in the SME and working capital segments.
Overall theme: Banking sector fundamentals remain solid, but early signs of loan deceleration warrant close monitoring.
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