KUALA LUMPUR (April 30): Malaysia’s gross loan growth held steady in March as outstanding loans rose, while corporate bond growth eased, data released on Thursday showed.

Credit to the private non-financial sector expanded 5.6% in March, unchanged from February, as loan growth strengthened to 5.6% from 5.1% previously. In contrast, growth in outstanding corporate bonds moderated to 5.8% from 7.4% amid lower bond issuances compared with the same period last year, Bank Negara Malaysia (BNM) said.

“The escalation of the West Asia conflict has led to elevated geopolitical uncertainty, contributing to more cautious global investor sentiment with spillovers to domestic financial markets,” BNM flagged in its statement. 

According to the central bank, business loan growth picked up to 5.8% from 4.6%, driven by stronger lending to non-small and medium enterprises (SMEs), particularly for working capital. Growth in investment-related loans, meanwhile, remained steady across both SMEs and non-SMEs.

Household loan growth held broadly stable at 5.4% (from 5.5% in February), supported by steady expansion across most segments.

On asset quality, BNM said gross and net impaired loan ratios were stable at 1.4% and 1%, respectively. 

The loan loss coverage ratio, including regulatory reserves, remained prudent at 125% of gross impaired loans, from 124.7% in February. 

The banking system also maintained healthy liquidity buffers, with the aggregate liquidity coverage ratio at 144.6% from 149.4%.