Malaysian banks well placed to manage weakening economy

The central bank pointed out that the domestic financial stability was expected to remain intact despite facing external headwinds which had caused global financial market volatility. The Financial Market Stress Index (FMSI) has been on the uptrend since August last year, with the recent reading at 10.7% as of end-February 2018

PETALING JAYA: The Malaysian banking system remains stable, as strong loss-absorbing buffers should mitigate a potential rise in credit costs and moderating profitability over the next 12-18 months, according to Moody’s Investors Service.

“The banks are well positioned to manage the challenges associated with Malaysia’s weakening economy and the vulnerable oil and gas, real estate and construction sectors, supported in particular by strong loan-loss reserves and solid capital ratios,” Moody’s vice president and senior credit officer, Alka Anbarasu, said in a statement Wednesday.