KUALA LUMPUR (Oct 30): Malaysia’s gross loan growth moderated in September 2024 amid slower expansion in lending to business and corporate bonds issuance, according to the central bank.

Credit to the private, non-financial sector rose 4.8% year-on-year in September, compared to August’s 5.2% increase, Bank Negara Malaysia (BNM) said in a statement. Business loans grew 4.5% compared to a 5.1% increase a month earlier, mainly due to deceleration in large firms’ borrowings.

Still, business loan disbursements were higher in September, with loans to the services sector remaining “forthcoming”, while lending moderated for the manufacturing and construction sectors, BNM noted.

Household loans growth, meanwhile, was a tad lower at 6.1% versus 6.2% in August, with steady growth across all purposes, the central bank said.

The pace of growth in the corporate bonds segment, on the other hand, eased to 2.1% from RM2.8% in August.

The data covers loans to households and non-financial corporations from the banking system and development financial institutions, as well as corporate bonds issued by non-financial corporations, including short-term papers.

“Asset quality in the banking system remained sound,” BNM said. Overall gross impaired loans — debts deemed unrecoverable as a percentage of total loans — improved to 1.5%, from 1.6% in August. On a net basis, the ratio of bad debts was stable at 1.0%.

Loan loss coverage, including regulatory reserves, remained at a “prudent” level of 125.1% of impaired loans.

Liquidity and funding positions were also strong, with a liquidity coverage ratio of 148.0%, while the aggregate loan-to-fund ratio remained broadly stable at 83.8%.

M3 — the broadest gauge of the country’s money supply, including currency in circulation, fixed deposits and foreign currency deposits — expanded at a slower pace of 4.4% in September, versus 4.4% in August.