HLBANK: Banking Sector Maintains Robust Performance with Strong Loan Growth

The banking sector continued to demonstrate resilience and growth in November 2025, with analysts maintaining an Overweight rating on the sector. Despite slight moderations in year-on-year (YoY) loan and deposit growth, the overall trajectory remains positive, driven by a robust non-household loan pipeline and healthy asset quality indicators.

Performance Review

System loans expanded by a healthy 5.2% YoY in November 2025, with household loans increasing by 5.4% YoY and non-household loans by 5.0% YoY. Key drivers included auto loans (+6.6% YoY), residential mortgages (+6.0% YoY), and credit cards (+8.3% YoY) within the household segment. The business segment also saw strong contributions from finance (+15.5% YoY), transport, storage, and communications (+8.8% YoY), utilities (+31.4% YoY), and real estate (+7.4% YoY) sectors.

The loan pipeline shows promising signs for future growth, particularly for the non-household segment, where loan applications surged 21.9% YoY and approvals rose 13% YoY. Overall loan application and approval growth for the system picked up significantly, rising 11.7% YoY and 9.2% YoY respectively. This robust pipeline, combined with delays in disbursements, is expected to translate into stronger loan growth in the coming months.

On the asset quality front, the system’s Gross Impaired Loan (GIL) ratio remained broadly stable at 1.40%, down from 1.51% a year ago. While there was a marginal month-on-month uptick of 1.3% in household and non-household GILs, the YoY decline in overall GILs indicates banks’ comfort in releasing existing provisions, leading to a drop in the Loan Loss Coverage (LLC) ratio to 85.1%.

Liquidity and capital indicators also remained healthy. The system Liquidity Coverage Ratio (LCR) stood at a comfortable 145.6% (well above the regulatory floor of 100%), and the CET-1 ratio was 14.1%. However, deposit growth was a laggard, expanding only 2.7% YoY, with the system Loan-to-Deposit Ratio (LDR) ticking higher to 90%.

Future Outlook

Analysts maintain a positive outlook for the banking sector, anticipating sustained strong loan growth in December 2025 and potentially spilling into 2026. The build-up in the approval pipeline and delayed disbursements are key factors supporting this forecast. Stable household loan growth is also expected to continue.

Furthermore, banks are expected to adequately meet future loan demand, leveraging non-deposit funding sources, and are not anticipated to engage in overly aggressive competition for deposits. The sector’s healthy fundamentals are expected to continue reinforcing its resilience.