The banking and corporate sectors expect home and auto lending to pick up as the country’s economy recovers.
However, some see that the real estate sector is still slow to recover, while the recovery in the automotive sector may still depend on the extension of incentives.
Amid concerns over high household debt in Malaysia, banks are monitoring their loan books and expect repayments to gradually improve.
Public Bank Bhd will continue to take advantage of incentives to boost the real estate and auto sectors, and expand its lending activities in support of the recovery, said Public Bank CEO Tan Sri Tay Ah Lek. (picture below)
The incentives include the reintroduction of the Home Buyers’ Campaign, the lifting of the 70% limit on the applicable finance margin from third ownership, valued at RM600,000 and above, as well as the waiver of real estate gains tax for the sale of dwelling houses.
In the automotive sector, the extension of the sales tax exemption until June 30, coupled with new vehicle launches since the fourth quarter of 2020, will stimulate demand for new vehicles as well as lending for hire-purchase.
Public Bank actively engages with its customers and provides additional financial assistance to those who have lost their jobs or suffered a drop in income.
“The group shares concerns about the nation’s high household debt and has always emphasized responsible lending by assessing affordability and customer needs before approving their financing,” Tay said.
CIMB Bank Bhd forecasts gradual growth in mortgage lending in 2021, following a slight moderation in property prices in 2020 as developers continued to launch affordable and strategically located projects. Lower borrowing costs, the ability to defer payment plans and first-time homebuyer incentives are among the homebuyer relief measures.
Since May 2020, CIMB has seen a recovery in the automotive sector and expects passenger car demand to improve steadily.
“After Movement Control Order 2.0, the majority of borrowers resumed their payments, and a similar trend of healthy loan repayments contingent on Malaysia’s recovery is expected,” the CIMB said.
RHB Bank Bhd expects its receivables or amounts due in its property and automotive portfolios to grow and contribute to its retail banking business, said RHB Bank Group Head of Retail Banking Rakesh Kaul.
RHB Bank has seen a downward trend in requests for further extension of payment assistance since the first quarter of 2021. As of March 2021, over 90% of RHB Bank’s loan and funding facility accounts had received payments, including those with or without payment assistance.
Alliance Bank Malaysia Bhd expects the residential sector to remain difficult for the time being, due to the impact of unemployment, wage cuts and movement controls.
Loan demand will be boosted by the recovery as employment and industries recover and new businesses emerge.
For now, Alliance Bank considers the reimbursement rate to be reasonably good, but it must remain vigilant as the pandemic is not over yet.
OCBC Bank (M) Bhd sees weak demand for home loans although incentives have been put in place, mainly for the primary market. There also remain concerns about overvaluation, said Thor Boon Lee, country risk director at OCBC Bank.
Loan repayments are coming in well and the vaccination program could be the catalyst for a faster recovery, Thor added.
Property developer Mah Sing Group Bhd expects the recovery momentum to continue as the business climate improves ahead of the vaccination program entering its second phase. said Mah Sing CEO Datuk Ho Hon Sang.
Any new government home ownership assistance program would also benefit the real estate sector.
Proton Commerce Sdn Bhd expects that despite the impact of Covid-19, consumer sentiment towards car buying will remain positive.
The hire purchase (HP) market is expected to grow in the second quarter of 2021, said Mooi Fi Phang, CEO of Proton Commerce.
This will be facilitated by festive celebrations and increased delivery of car models with large orders in progress, such as the Proton X50.
But growth in new car sales could slow in the second half if the government decides not to extend sales tax exemptions for new cars beyond the end of June 2021, Mooi said.
In 2020, the HP market grew by 5% to RM165, while the total industry volume contracted by around 12% to 529,434 units.
The average age of borrowers indicates that Malaysians are buying cars at an increasingly younger age.
Generally speaking, the opinion is that the real estate and auto sectors have not yet recovered.
Fortress Capital CEO Thomas Yong finds buyers who had held off on purchases expecting lower prices have re-entered the real estate market as sales in the fourth quarter of 2020 improved from the same period in 2019, especially for residential properties.
But sales of new property launches in 2020 had been weak due, among other things, to the large surplus, said former chief economist at the RHB Research Institute, Peck Boon Soon, adding that it is Real estate sales are unlikely to rise sharply in the next few months amid a slow rollout of the vaccination program.
In terms of buying big-ticket items, people are always cautious, said Chris Eng, chief strategy officer of Etiqa Insurance and Takaful.
The recovery in demand for the purchase of cars and residential properties in the second half of 2020 has slowed recently, said the executive director of the Center for Socio-economic Research, Lee Heng Guie.
Despite sitting on a pile of accumulated savings, some buyers are taking a wait-and-see approach amid sentiment of caution and a weak labor market.
The jump in car sales in March could be due to the backlog of late-delivery car registrations from some car brands, Lee said.
Many sectors are currently “flat on their stomachs”, former Inter-Pacific Securities research chief Pong Teng Siew said, adding that it will take four to five years for the economy to fully recover. .
Confidence needs to be rebuilt and economic activities need to be vigorously revived, said Areca Capital CEO Danny Wong.
Many sectors are still lagging behind and very few are doing really well; recovery efforts must be accelerated. Yap Leng Kuen is a former editor of StarBiz. The opinions expressed here are those of the author.