BANK NEGARA Malaysia’s March banking data showed stronger business lending activity, which may indicate companies are tapping into working capital facilities in response to the Middle East conflict and the resulting rise in energy and commodity costs.
Although these developments have introduced some uncertainty into the near-term outlook, RHB believes the banking sector remains well-positioned to manage potential risks, supported by existing overlays and healthy provision buffers.
Against this backdrop, the research house continues to favour a combination of defensive banking names such as PBK, MAY and Hong Leong Bank to weather ongoing volatility, alongside lagging counters including CIMB and AMMB that could benefit as concerns over rising cost pressures gradually ease.
Overall system loan growth rose 5.4% year-on-year in March 2026, an improvement from the 4.5% to 5% growth range recorded in the first two months of the year.
The stronger performance was mainly driven by the business segment, where loans expanded 5.6% year-on-year, compared with 4.4% in February 2026 and 4.1% throughout 2025.
Working capital loans grew 3.2% year-on-year (YoY) while by sectors, key contributors include electricity, gas & water (+31.1% YoY), transport, storage & communications (+15.2% YoY), and construction (+9.8% YoY).
Over at the household segment, loan growth remained steady at +5.2% YoY, supported primarily by purchase of securities (+7.3% YoY) and hire purchase loans (+6.4% YoY).
Mar 2026 leading indicators continued to show positive momentum, with year-to-date (YTD) system loan applications and approvals up 4% and 13% YoY.
In a similar vein, it was the business segment driving overall growth, with business loan applications up 8% (transport; storage & communications; and wholesale & retail trade, restaurants, and hotels) while approvals rose 26% YoY (transport, storage & communications; finance, insurance & business activities; and real estate) on a YTD basis.
YTD household loan applications and approvals, however, were broadly flat.
“We keep our 5-5.5% system loan growth for 2026. System deposits grew 4.2% YoY, driven primarily by CASA (+9.4% YoY), which lifted the system CASA ratio to 32.7%,” said RHB. —May 4, 2026
