CGS-CIMB expects upward reversal in CCR 17-24pc potential growth for Aug 2021-Dec 2022 period

KUALA LUMPUR, Oct 20 — CGS-CIMB Securities Sdn Bhd is expecting an upward reversal in the growth of credit card receivables (CCR) starting from October 2021 with potential growth of 17 per cent to 24 from August 2021 to December 2022.

The stockbroking firm said this was due to the government’s move to lift the ban on interstate and international travels for fully vaccinated individuals starting from Oct 11, 2021.

“Assuming the CCR would increase back to the pre-Covid-19 level of RM38 billion to RM40 billion by end December 2022, the industry’s CCR could balloon by between 17.5 per cent and 23.7 per cent in 16 months,” it said in a research note today.

CGS-CIMB said the CCR of the banking industry started to decline year-on-year (Y-o-Y) in March 2020 when the government imposed the Movement Control Order to curb the spread of Covid-19.

It said this resulted in banks CCR falling by 12.5 per cent y-o-y in 2020 and 11.1 per cent Y-o-Y to RM32.3 billion at end-August 2021.

The stockbroking firm said the expected recovery in the CCR growth would not only lift banks’ loan growth but also enhance banks’ net interest margin (NIM) and fee income.

Meanwhile, CGS-CIMB said it expected the recovery in the CCR growth as another earnings driver for banks in 2022 although the impact on banks’ earnings would not be significant.

Therefore, it has maintained “overweight” call on banks with the expected continuation of earning recovery in calender year 2022 forecast with projected core net profit growth of 7.3 per cent

The top picks for the sector are Public Bank, Maybank and Hong Leong Bank. — Bernama

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