Half of RM1.16 trillion household debt is housing loans

Half of RM1.16 trillion household debt is housing loans
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PETALING JAYA (Nov 2): The overall household debt level stands at RM1.16 trillion – about 83.8% of gross domestic product (GDP) as at end-June 2018, said the Ministry of Finance (MoF) in its Economic Outlook 2019 report.

The debt level has been moderating since 2015 following macro prudential measures implemented to rein in household debt levels, MoF said in the report.

The bulk of debt comprises loan for purchase of residential properties (53%), followed by personal use (14.4%) and passenger cars (13.8%).

Meanwhile, total household financial assets remain strong at RM2,458.4 billion. The debt servicing capacity of household remained intact, supported by stable income and employment growth.

“Given the stable employment rate (national unemployment rate remained at 3.4% in the first half 2018) and income, the household debt level is expected to remain manageable in 2018 and 2019,” stated the report.

Malaysian banking sector activities remain resilient in the first seven months of 2018 with all financing indicators expanding.

According to the report, loan applications, approvals and disbursements increased by 5.7%, 5.1% and 7.3% to RM505 billion, RM223.1 billion and RM678.8 billion respectively.

Meanwhile, total loans outstanding expanded 5.3% to RM1.63 trillion as at end-July 2018.

“Lending to household continued to record firm growth with loan disbursements increasing significantly by 13.2% to RM191.7 billion in the first seven months of 2018.

“Loans disbursed to the household sector were mainly for consumption credit which totalled RM90.4 billion (47.2%), followed by residential properties at RM49.9 billion (26%) and passenger cars at RM22.8 billion (11.9%),” read the report.

As at end-July 2018, total household loans outstanding expanded 6% amounting to RM936.7 billion, accounting for 57.4% of the total loans outstanding in the banking system.

Banking system: loans outstanding by sector (end-July)

 

RM billion

Share (%)

 

2017

2018

2017

2018

Business

567.4

285.3

36.6

36.1

Non SMEs*

275.3

285.3

17.8

17.5

SMEs

292

303.2

18.8

18.6

Selected sectors

 

 

 

 

Primary agriculture

37.6

35.4

2.4

2.2

Mining and quarrying

11

10.9

0.7

0.7

Manufacturing**

102.9

107.6

6.6

6.6

Electricity, gas and water supply

9.5

13.3

0.6

0.8

Wholesale and retail trade, restaurants and hotels

113.8

119.3

7.3

7.3

Construction

70.8

80.5

4.6

4.9

Real estate

111.2

117.3

7.2

7.2

Transport, storage and communication

40.7

37.9

2.6

2.3

Finance, insurance and business activities

107.7

110

6.9

6.7

Households

883.8

936.7

57

57.4

Purchase of residential properties

473.2

513.9

30.5

31.5

Purchase of non-residential properties

79.5

79.8

5.1

4.9

Purchase of passenger cars

146.5

146

9.5

9

Consumption credit

102.4

108.4

6.6

6.6

Credit cards

35.3

36.3

2.3

2.2

Personal use

66.9

72

4.3

4.4

Purchase of securities

59.6

64.9

3.8

4

Others

22.5

23.7

1.5

1.5

Other sectors

98.3

105.8

6.3

6.5

Total***

1549.4

1631

100

100

* Non-SMEs refers to large corporations, including foreign entities, other domestic entities, Government and others.

**Including agro-based.

***Total = Business + Households + Other sectors.

Banking System: Loan indicators January-July

 

RM billion

Change (%)

 

2017

2018

2017

2018

Total*

 

 

 

 

Loans applications

477.6

505

4

5.7

Loans approvals

212.2

223.1

11.2

5.1

Loans disbursements

632.5

678.8

5.6

7.3

Loans outstanding**

1549.4

1631

5.6

5.3

 

 

 

 

 

Business Sector

 

 

 

 

Loans applications

206.6

221.8

-4.7

7.4

Loans approvals

97.3

100.5

8

3.3

Loans disbursements

463.2

487

6

5.2

Loans outstanding**

567.4

588.5

6.7

3.7

 

 

 

 

 

SMEs

 

 

 

 

Loans applications

97.5

107.7

-3.5

10.5

Loans approvals

34.3

37.5

-3.3

9.1

Loans disbursements

160.7

170.9

10.8

6.4

Loans outstanding**

292

303.2

8.1

3.8

 

 

 

 

 

Households

 

 

 

 

Loans applications

271

283.1

11.8

4.5

Loans approvals

114.9

122.6

14.1

6.7

Loans disbursements

169.3

191.7

4.4

13.2

Loans outstanding**

883.8

936.7

5.1

6

Source: Bank Negara Malaysia

 

*Includes foreign entities, other domestic entities, Government and others.

**Total may not add up due to rounding.