KUALA LUMPUR (April 30): Credit to the private non-financial sector in Malaysia grew at a faster rate of 5.5% as of end-March, up from 5.1% in February, primarily driven by stronger growth in outstanding corporate bonds, alongside steady growth in outstanding loans, according to data from the central bank.

Outstanding corporate bonds experienced a notable increase, growing by 5.3% in March compared to 3.8% in the preceding month, while outstanding loans remained robust at 5.6%, slightly higher than the 5.5% recorded previously, according to Bank Negara Malaysia's monthly highlights issued on Wednesday.

Breaking down the loan segment, business outstanding loan growth edged up to 4.8% in March from 4.5% in February on higher growth in loans for working capital purposes, mainly among non-small and medium enterprises.

Household loan growth, meanwhile, was steady at 6%, the same as in February, with sustained growth across most loan purposes.

The data indicates a strengthening appetite for borrowing within the private sector, particularly through the issuance of corporate bonds, while household lending continues on a stable growth trajectory. The uptick in business loans for working capital suggests ongoing economic activity and investments by larger enterprises.

Banks' asset quality remained healthy, BNM said, with the gross impaired loans ratio — used to gauge the quality of banks' loan portfolios, with a lower ratio suggesting better asset quality — easing a little to 1.4% from 1.5% a month ago, though the net impaired loans ratio stayed the same at 0.9%.

The loan loss coverage ratio — which includes regulatory reserves — continued to be prudent, increasing to 131.3% from 130.3% a month earlier.

Malaysia’s banking system also continued to maintain "healthy liquidity buffers", BNM said, with an aggregate liquidity coverage ratio — which provides insights into their ability to manage credit risk and prepare for potential losses — of 151.6%, despite dipping slightly from February’s 154.4%.

The aggregate loan-to-fund ratio increased slightly to 83.9% from 83% in February, driven by sustained loan growth.