Top Calls
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Sector Update � Banking (NEUTRAL,
maintain)
- Repayments continue to weigh down loan growth The banking system loan growth as at Aug14 (+4.6% ytd) remains behind our 2014 target of 9.0% due to higher repayments Jan-Aug14 (+16.7% yoy) which is ahead of Jan-Aug14 disbursements (+12.4% yoy). Higher repayments were largely related to household, manufacturing, retail trade and finance/insurance sectors. However, our channel checks indicate that certain sectors may see a pick-up in 2H14, with Aug14, loan applications, approvals and disbursement rebound mom driven mainly by the business segment. As at Aug14, household loans continued to maintain a steady growth rate of 11.0% yoy (vs. 11.1% yoy in July14) despite the macro-prudential measures. Maintain NEUTRAL on the sector. Our top stock picks include Hong Leong Bank, AFG and Maybank.
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