Malaysian banks' loan growth feared to make a stall in 2014

Should they start panicking?

According to CIMB, banks could achieve the lower end of the projected loan growth of 10-11% for 2013. 

"We see the possibility of a slowdown in loan growth to 9.5-10.5% in 2014 but we think that the margin contraction will be narrower this year as mortgage rates have stabilised in the past 1-2 years," CIMB said.

Here's more from CIMB:

Overall, we continue to rate the sector a Neutral, with RHB Capital as our top pick.

The industry’s loan growth stayed at 9.9% yoy in Oct-Nov 13, with stable rates of 11.9% yoy for consumer loans and 7.4% yoy for business loans.

It is noteworthy that the momentum for residential mortgages picked up from 12.9% yoy in Oct 13 to 13.3% yoy in Nov 13, which in our view, could be due to the rush by housebuyers to take up loans before the implementation of tighter measures in early 2014.

We are also positive on the double-digit growth rate for applications in Jul-Nov 13 (+40.8% yoy in Nov 13). But approvals slid by 8.6% yoy in Nov 13, indicating that the recovery in loan growth could be weak towards year-end but is likely to accelerate early next year if the application momentum stays robust.