KUALA LUMPUR: AmResearch remains positive on the banking sector following the positive developments from the data in December 2009, especially after industry loan growth accelerated to 7.8% YoY in December 2009 from 7.0% YoY in November 2009.

It said on Friday, Jan 29 the pick-up in loans growth came from residential mortgage. Overall loans applications recorded a third consecutive month of robust growth at 33.3% in December 2009.

The SME segment continued to maintain robust expansion rate in applications growth at 45.5% YoY in December 2009. Loans approved category expanded by 31.4% YoY in December 2009, again a third consecutive month of strong growth.

Loans approved category expanded by 31.4% YoY in December, again a third consecutive month of strong growth. Deposits expanded 9.3% YoY in December 2009. Bank Negara said mainly domestic non-bank financial institutions, individuals and banking institutions as well as payment of year-end bonuses, drove growth.

Loans-deposit ratio remains low at 73.7% in December 2009. Headline NPL data improves further as absolute level of gross non-performing loans (NPLs) (3-month basis) continues to trend lower.

"Overall industry statistics still indicating positive vibes, as headline data remains positive with industry statistics still point towards improvement in NPLs and likelihood of pace of loan growth accelerating.

"We remain positive on the banking sector.Our top picks are AFG, CIMB, HLBB and RHB Cap," it said.