KUALA LUMPUR, May 31 — The banking system continued to maintain healthy liquidity positions, recording a strong liquidity coverage ratio of 156.7 per cent, a position which remained supportive of intermediation activities, said Bank Negara Malaysia (BNM).
The central bank said the banking system saw stable funding growth, particularly in retail deposits, which continued to support banks’ intermediation activities with the aggregate net stable funding ratio (NSFR) standing at 119.0 per cent as of March 2022.
The asset quality in the banking system also remained intact with overall gross impaired and net impaired loans ratios remaining stable at 1.6 per cent and 0.9 per cent respectively, it said in its monthly highlights-April 2022 report, which was released today.
“Banks continued to be prudent in loan provisioning to buffer against potential credit losses, with total provisions and regulatory reserves amounting to RM40.2 billion in April 2022 from RM39.8 billion in March 2022.
“Total provisions stood at 1.8 per cent as a share of total banking system loans and 113.4 per cent of impaired loans,” it said.
BNM noted that the net financing growth was also sustained in April, continued to grow at 4.6 per cent, supported by higher growth in outstanding loans of 5.0 per cent compared to 4.6 per cent in March, amid some moderation in the growth of outstanding corporate bonds at 3.7 per cent against 4.6 per cent in March.
“The outstanding household loan growth was sustained at 4.9 per cent, reflecting steady growth across most purposes.
“Growth in loan disbursements during the month was slightly higher at 10.8 per cent versus 10.2 per cent in March amid a pickup in loan repayments growth of 8.5 per cent (March: 3.2 per cent),” said BNM.
For businesses, outstanding loan growth increased to 5.7 per cent from 4.5 per cent in March, reflecting higher growth in working capital loans which rose to 8.3 per cent from 6.3 per cent in March, as the growth in working capital disbursements outpaced that of repayments, it added.
On the financial market, BNM said that the bond yields had increased, driven mainly by external developments.
In April, it said, global financial conditions tightened due to expectations of faster US monetary policy normalisation and higher investor risk aversion due to the military conflict in Ukraine, and despite spillovers to the domestic financial markets, adjustments remained orderly amid healthy average trading volumes.
“The 10-year MGS yields rose by 53 basis points, alongside higher bond yields globally. The FBM KLCI increased marginally by 0.8 per cent due to improved prospects for the domestic economy as Malaysia transitioned into endemicity.
“Meanwhile, the ringgit depreciated, in line with major and regional currencies, following foreign portfolio outflows during the month, as investors reallocated their funds into safe-haven assets such as in the US,” BNM said.
On the export, BNM said Malaysia’s export grew by 20.7 per cent in April against 25.3 per cent in March, reflecting continued strength across Malaysia’s export products.
“Moving forward, export performance will continue to benefit from external demand and global technology upcycle. In addition, high commodity prices and improving production will provide further impetus to exports.
“Nonetheless, the trade outlook remains contingent on the global supply chain disruptions and the military conflict in Ukraine,” the central bank said.
Meanwhile, BNM noted that Malaysia’s headline inflation slightly increased to 2.3 per cent in April from 2.2 per cent in March, while core inflation was marginally higher at 2.1 per cent against 2.0 per cent in March.
“The increase in inflation was due mainly to higher inflation for food away from home, air travel fares, and repair and maintenance for personal transport,” it added.
