Bank Negara Malaysia governor Tan Sri Nor Shamsiah Mohd Yunus warned that higher-than-expected domestic inflation and input costs could weigh on the country's growth outlook. 

This is in addition to external headwinds that continue to present downside risks to growth, she said. “This includes a sharp tightening in global financial market conditions, further escalation of geopolitical conflicts, and extreme weather events," she told a media briefing on the launch of BNM's Annual Report 2022, the Economic and Monetary Review 2022 and the Financial Stability Review for the second half of 2022 on Wednesday (March 29).

BNM governor cautions that elevated inflation, input costs could weigh on Malaysia's growth outlook

Malaysian banks have yet to mark-to-market about 6-7% of their total bonds holdings, which is deemed a small percentage compared to the likes of the Silicon Valley Bank, which constitutes 40% of its total assets, according to Bank Negara Malaysia’s governor Tan Sri Nor Shamsiah Mohd Yunus.

BNM: Up to 7% of Malaysian banks' bonds holdings yet to be marked-to-market, but not cause for concern 

Bank Negara Malaysia treading the water carefully before the next monetary policy meeting to not to ‘overshoot’ or ‘undershoot’ its delivery of Overnight Policy Rate (OPR) in the next meeting.

BNM not looking to ‘overshoot’ or ‘undershoot’ interest rates delivery at next MPC meeting, says governor 

Additional Tier 1 (AT1) bonds issued by Malaysian banks are ranked higher than equity holdings in the case of liquidation, said Bank Negara Malaysia (BNM) governor Tan Sri Nor Shamsiah Mohd Yunus.

“It is senior [than equities]. Our banks do not rely on AT1 for capital, so if you look at the components of the capital, more than 80% of them are equities and retained earnings,” she told a press briefing after releasing the central bank’s Annual Report 2022.

BNM: AT1 bonds issued by Malaysian banks rank higher than equities

With hindsight of the relatively stable nominal effective exchange rate for the ringgit and the country’s unchanged relative competitiveness in 2022, Bank Negara Malaysia (BNM) believes Malaysia has chosen the right path to remain on the flexible exchange rate regime, instead of heeding some calls to repeg the local currency to the US dollar.

Remaining on flexible exchange rate regime helped sustain Malaysia’s economy in 2022, says BNM

Bank Negara Malaysia (BNM) said the stress test results reaffirm the resilience of financial institutions in the country even under severe simulated shocks.

According to the central bank, the aggregate capital ratios of the banking system will remain comfortably above the regulatory minima.

Stress test shows Malaysian banks are able to withstand 'significant financial shocks'

The degree of the exchange rate pass-through (ERPT) to import price inflation in Malaysia was on average and within the findings from both advanced and emerging market economies, Bank Negara Malaysia (BNM) said.

Malaysia's exchange rate pass-through to inflation on average versus emerging economies

Non-residents were net sellers in the domestic government bond market in 2022, with a net outflow of RM7.8 billion, according to Bank Negara Malaysia (BNM), a trend that it said was also observed in many other emerging economies amid expectations of tighter global monetary conditions.

Malaysia's bond market remains resilient despite heightened market volatility, says BNM

Household debt expanded at a faster pace of 5.5% in 2022, driven by housing loans, pointing to sustained demand for house purchases spurred by measures to encourage homeownership.

With nearly 60% of household debt made up of housing debt, risks from higher-than-anticipated default rates and sharp falls in house prices remain in focus, said Bank Negara Malaysia (BNM).

BNM: Household debt continued to be driven by residential loans, debt servicing capability remained sound in 2022

The profitability of insurance and takaful funds improved in the second half of 2022 (2H2022) amid better investment returns, Bank Negara Malaysia (BNM) said in its Financial Stability Review report for 2H2022.

Insurance and takaful funds’ profit recovered in 2H on better investment performance, BNM says

While market valuations of listed banks in Malaysia rose in the second half of last year (2H2022), they have not fully recovered to pre-pandemic levels, according to Bank Negara Malaysia (BNM).

In its Financial Stability Review report for 2H2022, BNM said this reflects investor concerns over lingering uncertainties in the operating environment for banks in 2023.

BNM: Valuations of banking stocks still stuck below pre-pandemic levels

Some 19,165 cases of online banking fraud involving RM94.6 million were reported by customers of financial institutions in the second half of 2022 (2H2022), up from the 9,735 cases totalling RM39.9 million reported in 1H2022.

A rise in the number of payment-related fraud incidents, both globally and domestically, highlights growing concern with cybercrimes, Bank Negara Malaysia (BNM) said.

Banks ramp up security measures amid rising financial scam cases

Buy-now-pay-later (BNPL) schemes, which grew at a more moderate pace in 2022 amid tapering customer demand, continued to target segments of Malaysian households, with the majority of users being younger and lower-income borrowers.

About 44% of BNPL users are aged between 18 and 30 years old.

Buy-now-pay-later facilities may place users at higher risk of spending beyond their means

Following two consecutive years of double-digit expansion, Malaysia’s gross exports are expected to register only a modest 1.5% growth in 2023, in line with a weaker global growth outlook, especially for Malaysia's key trade partners among advanced economies, according to Bank Negara Malaysia (BNM).

Gross exports grew 26.1% in 2021 and 25% in 2022. The average growth for 2015-2019 was 5.6%.

BNM Annual Report

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