Total loans to household and business grew 10% in first 7 months of the year

PETALING JAYA: The financing space appeared more vibrant in the first seven months of the year, as total number of loans disbursed for both households and businesses grew by 10% to RM632.5 billion from RM574.8 billion, in parallel to the sanctioning rate by banks, which also rose by 11.2%, with some RM212.2 billion worth of loans approved, according to the 2017/18 Economic Report.
This was on the back of the higher number of loans applications which rose by 4.1% to RM477.5 billion (2016:RM458.9 billion),whereas total outstanding loans expanded 5.6% to RM1549.4 billion from RM1467.3 billion.
Lending to households accounted for RM270.9 billion (2016:RM242.2 billion), of the total loans application, of which RM114.9 billion were approved as compared to the RM100.6 billion last year.
About 46.7% or RM79.1 billion of the RM169.3 billion in total loans disbursed to households were for consumption credit, followed by loans to purchase residential properties which accounted for 26.1% with RM44.3 billion.
While loans disbursed for consumption credit saw an increase as compared to the RM76.6 billion dished out between January and July 2016, lending for the purchase of residential properties dropped by a marginal RM400,000.
Meanwhile a total of RM416.4 billion was disbursed as business loans for the same period compared with RM364.5 billion last year.
The manufacturing sector took away about 19.4% of the RM416.4 billion disbursed as business loans (2016: RM364.5 billion disbursed in 2016).
This was followed by the retail and wholesale trade, restaurants and hotels sectors, each accounting for 18.7% of the total loans disbursed.
Although business loans approvals from banks for the period between January and July, increased by 10.4% to RM86.9 billion from RM78.7 billion, the application rate fell 1.4% to RM189 billion from RM191.7 billion. The decline in applications is mainly noted amongst small and medium enterprises.
The SME segment saw a strong growth with total loans disbursed growing by 13.4% to RM160.7 billion from RM141.7 billion, despite the decline in loans application (3.5% to RM97.5 billion from RM101 billion) and approvals (3.3% to RM34.4 billion from RM35.5 billion.)
It was noted that a bulk of the outstanding loans owed by SMEs which stood at RM292 billion (RM270.2) were used for working capital and purchase of landed properties.
Currently, seven banking institutions and three developmental financial institutions offer micro- financing scheme, a small business loan scheme catered for micro-enterprises.
In the period of seven months, the total financing approved under these scheme amounted to RM223.5 million which was channelled to 8,984 accounts. Between 2006 and July 2017, more than RM3.6 billion has been channelled to some 209,954 accounts under this scheme.
Besides conventional bank loans from financial institutions, financing needs of SMEs were further supplemented by other sources of funding.