Banking sector seen able to withstand impact of oil price crash

Wong: RAM Ratings expects the banking system’s loan growth to slow down to 7 this year.

The banking sector will not likely see a downgrade even with a further cut in government expenditure if crude oil prices were to hover around US$45 a barrel and the ringgit continues to weaken, according to some economists and analysts.

Malaysia University of Science and Technology School of Business dean and economist Dr Yeah Kim Leng said a further cut in government expenditure may be necessary if world oil prices remained at US$45 per barrel which was below the Government’s revised Budget 2015 assumption of US$55 per barrel.