KUALA LUMPUR: Banks’ asset quality remained sound in February with overall net impaired loans ratio remaining stable at 1%, Bank Negara Malaysia said.
“Banks continued to maintain sufficient buffers against potential credit losses with total provisions (including regulatory reserve) at 125.1% of total impaired loans, ” it said on Tuesday.
In its monthly highlights for February, Bank Negara said net financing growth rose at 5% in February (January: 4.7%), due to the faster expansion in outstanding loans of 3.9% (January: 3.5%).
Outstanding corporate bond growth also increased slightly to 8.2% (January: 8.0%).
Bank Negara also said outstanding business loan growth increased in February to 3.6% from January’s 2.5%) due mainly to lower repayments, which reflects a normalisation from its high levels in recent months.
Disbursements were broadly sustained during the month.
“However, outstanding household loan growth declined (February: 3.7%, January: 4.5%) on account of lower disbursements for credit cards, and securities and car loans, ” it said.
Commenting on exports, it said they contracted by 1.5% in January 2020 (December 2019: +2.7%) due to slower growth in manufactured exports and a sharper decline in commodities exports.
“Going forward, export growth is expected to remain weak, reflecting the adverse impact of Covid-19 on global demand and supply chains, ” it said.
Bank Negara also pointed out there was risk aversion in domestic financial markets
In February, domestic financial markets experienced non-resident outflows amid higher global risk aversion following the worsening of Covid-19 epidemic.
As a result, the ringgit depreciated by 3.3%, in line with all regional currencies (between -3.4% to -0.3%). The FBM KLCI also declined by 3.2% to close at 1,483 points as at end-February, in line with regional equity markets.
“Despite non-resident outflows, yields in the domestic bond market declined. In particular, the 10-year MGS yield declined by 30.5 basis points.
“While domestic institutional investors provided some support, the large decline mainly reflected expectations for monetary easing amid concerns over the growth outlook, ” it said.
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