Banking Sector : Improvement in key indicators despite slower loans growth NEUTRAL

SECTOR FOCUS OF THE DAY

Banking Sector : Improvement in key indicators despite slower loans growth      NEUTRAL

Industry loans growth was impacted by several one-off business loan repayments as well as due to the effect of higher base in August 2015. The industry loans growth slipped to +4.2%YoY in August 2016 (July 2016: +5.1%YoY) due to slower business loans from the impact of several repayments while household loans growth was stable.

Higher level of loan applications from household and non-household in August 2016 compared to the previous month. Growth industry loan applications was still negative at -1.6%YoY in August 2016 (July 2016: -18.0%YoY). Nevertheless, the level of loan applications by both household and non-household increased in August 2016 compared to July 2016

Outstanding impaired loan balance declined by -1.2%MoM contributed by lower impaired working capital loans. Compared to the previous month, impaired loan balance declined by -1.2%MoM. Total GIL and NIL ratio for the industry held up at 1.7% and 1.3% respectively. The increase in GIL ratio for working capital loans seen in the previous month improved 10bps MoM in August 2016 to 2.4% while GIL ratio for personal loans did not deteriorate further and remained at 2.1%. Meanwhile, GIL ratios for the other loans segments were stable compared to the preceding month.\

Others :

Pavilion Reit : Stable growing retail REIT BUY

MISC : No impact from Gumusut Kakap FPS arbitration HOLD

SapuraKencana Petroleum : New contract wins within expectations        HOLD

QUICK TAKES

Genting Malaysia : Sells shares in GenHK to related party              HOLD

Plantation Sector : Newsflow for week of 26-30 September         NEUTRAL

ECONOMIC HIGHLIGHTS

Japan : BOJ remains unclear as to how to kick start inflation

Malaysia : Manufacturing PMI fell modestly

NEWS HIGHLIGHTS

Oil and Gas Sector : Bondholders say no to Perisai

Construction Sector : Penang Master Builders: RM200bil projects likely this year

Conglomerate : YTL acquires three new luxury properties in the UK