KUALA LUMPUR (May 30): Malaysia’s gross loan expanded at a steady pace in April this year, as increase in household loans and corporate bonds issuance offset slower lending to businesses, official data on Friday showed.

Credit to the private non-financial sector rose 5.5% year-on-year in April, Bank Negara Malaysia (BNM) said in a statement. Outstanding corporate bonds climbed 5.5%, outpacing March’s 5.3% gain, while the rate of household loans increase was stable at 6.0%.

Business loan growth, however, moderated to 4.6% from 4.8%, mainly due to deceleration in the services sector. “Demand for business financing remained forthcoming” across both small-and-medium enterprises (SMEs) and non-SMEs, BNM said.

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.

Malaysia’s banking system continued to maintain “healthy liquidity buffers” with aggregate liquidity coverage ratio — a measure of banks’ short-term resilience to liquidity disruptions — rising to 155.8% in April, from 151.6% in March.

The aggregate loan-to-fund ratio ticked up slightly to 83.9%, from 83% in February, driven by sustained loan activity in the system.

On asset quality, BNM said the gross impaired loans ratio — a key measure of credit risk in banks’ portfolios — remained stable at 1.4%, while the net impaired loans ratio was unchanged at 0.9%.

Meanwhile, the loan loss coverage ratio — which reflects banks’ preparedness to absorb potential credit losses — stood at 131%, and was little changed from 131.3% in March.