Loan growth in Malaysia will be higher for 2022

Loan growth in Malaysia will be higher for 2022

Loans growth is usually a sign of the economy. Investopedia says this about loan. Loans allow for growth in the overall money supply in an economy and open up competition by lending to new businesses. The interest and fees from loans are a primary source of revenue for many banks, as well as some retailers through the use of credit facilities and credit cards. Read it in full at investopedia.

Since it’s considered positive, let’s see how the loan growth in Malaysia would be for 2022.

Article in MARC Rating Corp Bhd head Ratings Portfolio for Financial Services Institutions Mohd Izazee Ismail said, “With the gradual reopening of all economic sectors and lifting of restrictions, we expect the banking industry to gain growth momentum and chart higher loan growth in 2022. Nonetheless, any change in the pace of recovery as a result of the impact of the new Covid-19 variant could result in a setback to growth.”

MIDF Amanah Investment Bank Bhd (MIDF Research) forecasted the industry loan growth for this year to stand at 5%. It said in a note recently, “We are counting on business loans to sustain its high level of growth, in tandem with consumer spending to ramp up retail loans.” Article in

Why loan growth is important?

When a business wants to expand, they will need a loan from the bank. Just growing organically will be very limiting. The banks love these loans.

For example, building a bigger factory and trying to get a bigger order from customers is not the same as trying to get a bigger order first and then only start building the factory. Build factory first and then go and get more business is a business risk. Get more orders and then only start building a factory? That’s called zero possibility. Not many customers, if any at all would sign a purchase order and then wait for the factory to be built…

Buying a car with loan?

People say car is a depreciating asset. We just need to remember that when people buy a car, the sales person has commission, the car sales agency has profits, the car manufacturer has to produce more cars and many more other stakeholders would also benefit. The salary received will enable the person to buy more goods and services too. This is why as long as loan is growing, then the economy continues to grow. This is not a debate on whether buying a car with a loan is a bad or a good decision.

Happy reading.

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Next suggested article: Loan Rejection. Why do banks refuse to lend to some of us?

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