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Business loans are expected to pick up the slack caused by the anticipated slowdown in property loans in the longer term, supported by the implementation of the Economic Transformation Programme (ETP).
ECM Libra Investment Research said property loans were expected to taper off in the second half of the year dampened by the ongoing monetary tightening by Bank Negara Malaysia (BNM) and a more stringent credit policy instigated by banks.
"The overnight policy rate is expected to be raised by another 25 basis points in the second half of the year.
"BNM is also expected to employ other monetary policy instruments such as imposition of additional macro prudential lending measures to dampen the inflation rate and decelerate the momentum of loans growth going forward," it said in a research note today.
It said the implementation of affordable housing scheme by the government could also tamper the speculative demand in the housing market.
ECM Libra said it has maintained 'neutral' stand on the banking sector.
Its top pick was Malayan Banking in view of its undemanding valuation. For exposure to the merger and acquisition and restructuring themes in the sector, it has picked RHB Cap and Alliance Financial Group (AFG).
Meanwhile, HwangDBS Vickers said it has maintained its 15 per cent growth target on the banking sector for this year on the back of positive loan growth traction.
The research firm picked AFG as its top pick for its scalable domestic franchise and non-interest income traction which would boost sustainable earnings and return on equity.
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