Improvement in the banking sector’s loan growth coupled with a pause in the Overnight Policy Rate could help revive growth in banks’ net interest income to 3.7% in 2021 against -6.7% in 2020 according to CGS-CIMB.
For the first eight months of 2020 , the industry’s total loan expanded 2.4% which translated to an annualised growth of 3.6% for 2020F. In addition, CGS-CIMB pointed out that gross impaired loan ratio continued to improve from 1.43% at end-July 2020 to another record low of 1.4% at end-August, due to the loan moratorium, during which most retail and SME borrowers did not need to service their loans.
Meanwhile, AmInvestment Bank Research expects the industry loan growth to be at 3-4% for the year despite the pickup in household loan.