Banking Sector Sees Slower Loan Growth in Feb 2025, Stable Asset Quality Amid Geopolitical Risks

In February 2025, Malaysia’s banking sector saw industry loan growth slow to 5.2% year-on-year (YoY) from 5.7% in January, driven by reduced momentum in working capital and investment loans for non-households, while household loans held steady at 6% YoY.

Banking Sector YTD

Year-to-date loans grew at a modest 2.7% annualized rate. Loan applications weakened, but approvals rose. Asset quality remained stable with a gross impaired loan (GIL) ratio of 1.5%.

Deposit growth saw a slight uptick. Analysts maintain a NEUTRAL outlook, forecasting 6.5% earnings growth in 2025, citing risks from geopolitical tensions and trade policies. Recommended buys include CIMB, Hong Leong Bank, and RHB Bank, while Maybank is underweight.

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