Malaysia’s banking sector recorded faster loan growth in September 2026, with lending increasing by 6.1% year-on-year (YoY), compared with 5.7% in August, supported by stronger demand for business financing, according to UOB Kay Hian.
Business lending expanded by 7.7% YoY during the month, accelerating from the 6.8% growth recorded in August. Meanwhile, household loan growth remained unchanged at 5% over the same period.
Lending to small and medium-sized enterprises (SMEs) improved, rising by 3.9% compared with 3.6% a month earlier. Working capital loans also recorded stronger growth of 7.4%, up from 5.3% in August. Mortgage and hire purchase lending growth remained steady at 5.3% and 5.2%, respectively.
The improvement in overall lending was accompanied by a significant increase in loan approvals, which surged 31.1% YoY in September, compared with 13.6% in the previous month.
Business loan approvals climbed to 50.8% from 36.4% in August, while approvals for working capital financing increased by 55.3%. SME loan approvals also recovered, recording 22.4% growth after contracting by 5.6% a month earlier.
Household loan approvals rose by 4.7% in September, reversing the 10.8% decline recorded in August. UOB Kay Hian attributed the improvement primarily to stronger approvals for hire purchase and credit card financing.
Meanwhile, total deposit growth stood at 5.2% YoY in September, remaining below the pace of loan expansion.
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