KUALA LUMPUR (Nov 28): Credit to Malaysia’s private non-financial sector recorded broadly sustained growth in October, supported by steady loan demand from businesses and households despite softer corporate bond issuance.
Year-on-year, private sector credit expanded 5.7% in October, marginally slower than September’s 5.9% increase, according to Bank Negara Malaysia’s (BNM) monthly highlights report released on Friday.
Outstanding loans grew 5.6% during the month, compared with 5.7% in September, while outstanding corporate bonds rose 5.8%, easing from 7.3% previously.
Outstanding business loan growth strengthened to 5.5% from 5.4% in September, driven mainly by higher working capital financing among non-small and medium enterprises (SMEs). Household loan growth remained stable at 5.7%, reflecting sustained demand across most loan purposes.
The data covers loans to households and non-financial corporates from the banking system and development financial institutions, as well as corporate bonds issued by non-financial corporates.
BNM further said the banking system continued to maintain strong liquidity buffers, with the aggregate liquidity coverage ratio at 147.5% in October versus 151.5% in September.
Asset quality indicators were broadly unchanged, with both the gross and net impaired loans ratios steady at 1.4% and 0.9% respectively. The loan loss coverage ratio, including regulatory reserves, stood at 126.4% of gross impaired loans, compared with 129.1% in September.
Domestic financial market movements in October were largely influenced by expectations of US monetary policy easing, BNM observed, with the US Federal Reserve delivering its anticipated rate cut at month-end.
The ringgit appreciated 0.5% against the US dollar during the month, supported by narrowing interest rate differentials and reduced tariff-related uncertainties following the US-Malaysia trade deal announcement.
The nominal effective exchange rate stood at 1.1%, compared with a regional average of -0.6%. Regional countries comprise Singapore, Thailand, the Philippines, Indonesia and South Korea.