Banking system records healthy excess capital buffer of RM133.3 billion in August - BNM

KUALA LUMPUR - The banking system recorded an excess capital buffer of RM133.3 billion in August 2023, Bank Negara Malaysia (BNM) said.

In August 2023 monthly highlights, the central bank said the capital position of Malaysian banks remained strong in their ability to withstand potential stress and provide credit to support economic activities.

BNM said the banking system’s resilience continues to be underpinned by sound asset quality, where overall gross and net impaired loans ratios remain largely unchanged at 1.8 and 1.1 per cent, respectively.

"Loan loss coverage ratio (including regulatory reserves) remains at a prudent level of 115.0 per cent of impaired loans, with total provisions accounting for 1.6 per cent of total loans,” it said.

In August, BNM said ongoing concerns surrounding the Chinese economic slowdown weighed on global financial markets.

"The People’s Bank of China announced an unexpected round of monetary policy easing. Meanwhile, US Federal Reserve chair Jerome Powell reaffirmed at the Jackson Hole Symposium that US monetary conditions would need to remain tight for longer.

"As a result, the ringgit depreciated against the US dollar by 2.1 per cent while the FBM KLCI declined by 0.5 per cent. 10-year Malaysian Government Securities (MGS) yields remain unchanged in August,” it said.

BNM said credit to the private non-financial sector grew by 3.8 per cent at the end of August from 3.8 per cent in July 2023, supported by higher growth in outstanding loans, the central bank said.

"For businesses, while outstanding corporate bonds grew at a slower pace of 4.4 per cent (July 2023: 5.2 per cent), outstanding loan growth increased to 0.7 per cent.

"This mainly reflected an improvement in the non-small and medium enterprises (SME) segment for both working capital and investment loans,” it said.

Of note, BNM said growth in outstanding loans to small and medium enterprises remained largely forthcoming at 6.2 per cent in August as compared to 6.7 per cent in the previous month.

"Growth in outstanding household loans was sustained at 5.3 per cent, supported by higher growth across most loan purposes. Household loan growth continued to be driven by loans for the purchase of houses and cars, which grew by 7.3 and 8.7 per cent, respectively,” it said. - BERNAMA