Which loan segments are driving growth for Malaysian banks?

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Mortgage, Auto, and Working Capital Loans are Driving Growth for Malaysian Banks

Malaysian banks are experiencing growth primarily driven by three key loan segments: mortgages, auto loans, and working capital loans. As of the end of March 2021, the banking system saw a year-on-year loan growth of +3.9 per cent, a slight acceleration from the previous month. This expansion was largely fuelled by the robust performance within these specific lending categories.
Mortgage Loans Show Significant Expansion

Mortgage loans have demonstrated substantial growth, reaching RM1.24 trillion by the end of March 2021, an increase of +5.5 per cent year-on-year. This segment has consistently contributed to the overall loan growth, indicating sustained demand for housing finance. The approval of loans for residential property purchases specifically saw a marked increase, growing by +35.6 per cent year-on-year to RM28.1 billion in the same period.
Auto Loan Segment Experiences Strong Rebound

The auto loan segment has also been a significant contributor to the overall growth, particularly for the purchase of passenger vehicles. This category experienced a notable year-on-year increase of +22.7 per cent, amounting to RM12.7 billion. This surge reflects a renewed confidence or demand in the automotive market, supported by bank lending.
Working Capital Loans Bolster Overall Pace

Working capital loans have played a crucial role in accelerating the overall pace of growth for Malaysian banks. While specific figures for working capital loan growth are not detailed separately, their inclusion as one of the top three drivers highlights their importance in supporting business operations and economic activity. Furthermore, loans approved for the purchase of non-residential properties also showed strong expansion, growing by +21.1 per cent year-on-year to RM7.5 billion, complementing the overall positive trend in property-related lending.

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