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🇲🇾 Malaysia /Economy & Trade

Malaysia’s Loan Growth Forecast Expected to Hold at 5.3% This Year

From Utusan Malaysia · () Malay

Translated from Malay and summarized by DistantNews. Read the original for the full story.

At a glance

Analysis Named sources Context piece
  • TA Securities expects Malaysia’s 2026 loan growth to remain at 5.3%, with household lending rising 5.3% and business lending 5.4%.
  • The firm maintained a neutral view on the banking sector, citing foreign fund outflows, weaker interim dividend announcements and portfolio repositioning ahead of a 2026 FBM KLCI 50 benchmark expansion.
  • Alliance Bank remained its top sector pick after gross loans grew 9.5% year on year and net credit costs fell to 0.3 basis points.

Malaysia’s loan-growth forecast is holding at 5.3% for 2026, according to TA Securities Holdings Berhad. Household loans are expected to grow by 5.3%, while business lending is projected to rise 5.4%.

The firm said banking-sector valuations could remain constrained by continued foreign-fund outflows, less attractive interim dividend announcements and portfolio restructuring ahead of the FBM KLCI 50 benchmark expansion in December 2026.

TA Securities nevertheless described the sector’s operating outlook as generally supportive. Stable loan growth, resilient non-interest income, steady asset quality and strong capital and liquidity buffers continue to support the banks. It reiterated ‘Hold’ recommendations for Maybank, CIMB, Public Bank, Hong Leong Bank, RHB Bank and AMMB, while maintaining ‘Buy’ ratings for Alliance Bank and Affin Bank.

Our top pick in the banking sector is Alliance Bank, supported by industry-leading loan growth, better asset quality and a resilient funding profile.

· TA Securities Holdings BerhadThe securities firm identified Alliance Bank as its preferred banking stock.

Alliance Bank was the firm’s preferred stock in the sector. Its gross loans grew 9.5% year on year, well above the industry average of about 5%, allowing it to continue gaining market share. Net credit costs fell to 0.3 basis points from 14.4 basis points a year earlier, mainly because of a strong recovery from its corporate portfolio.

The bank also had a current account and savings account ratio of 37.7%, giving it a stable and relatively low-cost funding base. TA Securities said this position could help Alliance Bank manage continued deposit repricing pressure and protect its net interest margin.

The firm warned that further margin compression, weaker asset quality and slower-than-expected loan growth remained key downside risks. Rising geopolitical tensions, weaker economic activity and softer business sentiment could further affect credit demand and earnings growth across the sector.

We believe this position allows the bank to withstand continued deposit repricing pressure and potentially maintain its net interest margin better.

· TA Securities Holdings BerhadThe firm linked Alliance Bank’s funding profile to its ability to protect margins.
About this summary

Originally published by Utusan Malaysia in Malay. Translated, summarized, and contextualized automatically by DistantNews, with a note on how the source frames the story. Not individually reviewed before publishing. How this works.

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