Consumer Credit in Malaysia

PROSPECTS

Urban families focus on investing in education

Education lending has potential for growth in Malaysia. Urban families are opting for smaller family units due to the rising costs of bringing up children.

Consumer lifestyles lead to a rise in card lending

Convenience and lower prices are attracting consumers to internet retailing. Online transactions primarily use card payment.

Bad months partly offset the good in auto lending

Many consumers took out auto loans during the three-month tax holiday in the middle of 2018, after the government axed the unpopular Goods and Services Tax (GST). Vehicle loan applications therefore hit a record value.

COMPETITIVE LANDSCAPE

Lending to lower-income consumers despite blow to corporate lending

The newly elected (2018) government’s swift decision to scrap and review several mega infrastructure projects dealt a sudden and major blow to corporate lending. This, coupled with the new government’s uncertain policies, have the potential to slow down loan growth in Malaysia.

Convenience and speed of service important to consumers

Speed of approval and convenience are being used as a competitive advantage, particularly for auto lending and personal lending. In some cases this means a move towards online application, such as Citibank’s offer of an online platform to apply for its personal loans.

Islamic financial banking continues to advance

The Malaysian Islamic banking sector is expected to see double-digit growth in financing in 2019, with Islamic loans progressing much faster than conventional loans. Despite the high cost of implementation, Islamic bank players are also embracing technology or digital services.

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