This is the reason why Maybank's corporate loan growth has been sluggish

Blame it on two-fold reason.

It has been noted that Malayan Bank's (Maybank) corporate loan growth has been soft, and a two-fold reason is seen behind this.

According to a research note from Nomura, firstly, there has been some chunky repayment during the year as corporates have been refinancing their debt.

Maybank undertook a large corporate debt restructuring exercise in 2Q14 wherein loans were converted into bonds which are still held at the group level. This caused a steep 7% YTD decline in outstanding balances in 1H14.

If these bonds are added back to the corporate segment, it is estimated that loan growth would have been flat YTD, or +6% y-y.

Second, a decline in trade finance market share was noted. During the year, trade finance loans contracted 7% y-y, stemming from a 1pp decline in market share to 25% between June ’13 and June ’14.

Management explained that Maybank pulled back from the market due to the lower margins prevailing during the period.

Subsequently, it decided to start growing the trade finance business again to prevent further erosion of market share and maintain business relationships with its customers.