Consumer Credit in Malaysia

PROSPECTS

Home lending growth depends on housing affordability and accessibility

The continuously rising value of property is putting off interest in home ownership. With housing ownership becoming a social issue, consumer credit for house lending is expected to drop steadily in the coming years, especially with young adults (18-29 years) preferring to spend their money on lifestyle purchases.

Urban families will focus on investing in education

Education lending shows the greatest promise for growth. Couples with children make up more than half the total expenditure.

Lifestyle of middle-income group sees rise in card loans

Convenience and lower prices are attracting consumers to online shopping. Online transactions are primarily made with a card payment.

COMPETITIVE LANDSCAPE

Uncertain policies lead to slower expansion

The newly elected Pakatan Harapan government’s swift decision to scrap and review several mega infrastructure projects dealt a sudden and major blow to the corporate lending industry. This, coupled with the new government’s uncertain policies, have the potential to slow down loan growth in Malaysia.

SST to impact loan growth

The Sales and Services Tax (SST), a single-layer tax that applies to manufacturers and importers, was due to be introduced in September. To make for a smooth transition from the Goods and Services Tax (GST) to SST, GST was zero-rated from June to August, which saw a rise in loan applications.

Banks remain cautious over slow loan growth

Banks set moderate targets for loan growth in 2018, following slow loan growth in the previous year. Banks started to lower their loan growth targets in 2017 to mid or lower single digits, with the same expected to happen in 2018, with The Edge Malaysia reporting local banks to be on track for 5% loan growth in May 2018.

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