'Hire purchase loans slowdown temporary'

The slowdown in hire purchase (HP) loan growth is expected to be temporary, said HwangDBS Vickers Research Sdn Bhd.

In a research note today, HwangDBS said the the turnaround time would return to normal once car dealers and banks refine their processes.

It said most banks were expected to report slower HP loan growth in the
second quarter due to the disruption to car parts supply after the Japanese
tsunami which consequently had a chain effect on car output locally and
regionally, as well as the amendments of the Hire Purchase Act (HPA).


"The amendments of HPA that became effective June 15, 2011 had slowed car
registrations and HP processes. "These policy changes are aimed at protecting car buyers but had unintentionally slowed down car sales due to the lengthy process involved," it said.

The research house said AMMB Holdings, Affin Holdings, Public Bank and the
merged Hong Leong Bank-EON Capital, with more than 20 per cent of their total loans in car segment, would be affected.

"However, the negative impact should be temporary," it said.

HwangDBS forecast total industry volume (TIV) to improve in the second half
as car parts supply normalised, and HP loans growth moderated in most banks’
upcoming quarterly results.

"We estimate total TIV at 611,200 units this year against 605,156 units last
year, implying marginal one per cent year-on-year growth," it said. -- Bernama