KUALA LUMPUR (Oct 3): Malaysia’s central bank said on Thursday domestic financial institutions, including insurers, remained supportive of economic growth amid resilient businesses and households while the ringgit strengthens.
Business resilience is expected to improve further in the second half of 2024 in line with the projected economic growth, Bank Negara Malaysia (BNM) said in a statement in conjunction with the release of the Financial Stability Review First Half 2024 report.
“Input costs are expected to ease amid lower commodity prices and the appreciating ringgit,” BNM said. Household resilience meanwhile continued to be supported by favourable economic and labour market conditions, it noted.
The banking system’s aggregate total capital ratio — which includes other forms of capital, such as subordinated debt and hybrid securities — stood at 18.4%, with capital buffers of RM136.1 billion over the regulatory minimum.
The insurance and takaful sector, meanwhile, built up an aggregate capital adequacy ratio, a measure of balance sheet strength, of 227% and excess capital buffers of RM37.4 billion.
“This will enable them to continue meeting households' and businesses' financing and protection needs as economic activities expand,” BNM said.
The central bank also took note of financial institutions’ continuous efforts to support the financial system’s operational resilience through strong operational risk management and fraud controls.
“BNM continues to raise standards expected of financial institutions in response to new and emerging threats,” said deputy governor Jessica Chew. “These include introducing enhanced expectations on managing risks posed by third-party service providers.”
The central bank also highlighted that further growth in cross-border QR payment volumes as transactions in the first half of 2024 have doubled the total volume recorded for the entirety of 2023.