KUALA LUMPUR, Sept 2 — Loan approvals grew at their slowest pace in 10 months in July while loan disbursements contracted for the first time, signalling a possible peak in credit demand, said a report on monetary trends by CIMB.

“The weak loan approvals and disbursements may presage the losing of loan growth momentum in coming months,” said CIMB in the report.

Loan growth slowed to 11.9 per cent in July year-on-year as compared with 12.5 per cent in June.

Business loan growth had slowed to 10 per cent but residential property loans grew 12 per cent.

The bank also said it expects interest rates to stay at 2.75 per cent until the end of the year as it was “ahead of the curve” in terms of normalising interest rates when compared with regional peers and in addition to concerns of a double-dip recession in the US.

Non-performing loans (NPL) meanwhile eased to 2.1 per cent in July from 2.2 per cent in June.

Malaysian banks are currently engaged in a price war, with some banks offering mortgage rates as low as base lending rates (BLR) -2.3 per cent as compared up from BLR -1.9 per cent previously.