KUALA LUMPUR: Following are the highlights of Bank Negara Malaysia’s (BNM) Financial Stability Review -- First Half 2025, released today, which provides an assessment of the current and potential risks to financial stability and the resilience of Malaysia’s financial system.
Households continued to demonstrate healthy debt-repayment capacity, supported by sound lending standards and favourable labour market conditions.
The debt repayment capacity of businesses remains sustained, driven by proactive cost management strategies.
Malaysia’s financial market conditions remained orderly despite heightened global volatility, driven by United States tariff developments, concerns over global growth and geopolitical tensions.
The ringgit appreciated by 6.1 per cent against the US dollar between March and September 2025, driven largely by external developments.
The median interest coverage ratio stood at 6.2 times, while the share of firms-at-risk remained stable at 24.4 per cent.
The credit quality of business loans was sustained, with the impairment ratio unchanged at 3.1 per cent.
Small and medium enterprise (SME) loans under repayment assistance programmes continued to decline, accounting for 4.1 per cent of total SME loans and just 0.7 per cent of total loans in the banking and development financial institution sectors.
The household debt-to-GDP ratio edged slightly higher to 84.8 per cent, while borrowers’ debt-servicing capacity remained healthy, underpinned by banks’ prudent lending standards.
Key indicators of debt repayment capacity remained sound, with the median debt service ratio (DSR) at 41 per cent for newly approved loans and 33 per cent for outstanding loans.
The quality of household borrowings remained sound, with the loan impairment ratio unchanged at 1.1 per cent.
The banking system’s total capital ratio stood at 18.2 per cent, with excess capital buffers of RM138.9 billion as of end-June 2025.
The insurance and takaful sector remained well-capitalised, recording an aggregate capital adequacy ratio of 223 per cent and excess capital buffers of RM42 billion.
Buy Now Pay Later (BNPL) schemes continued to expand rapidly, though outstanding BNPL exposures remained small at 0.2 per cent of total household debt. The share of loans with increased credit risk (Stage 2 loans) remained unchanged at 11.9 per cent.
Funding and liquidity positions remained healthy, with a Liquidity Coverage Ratio (LCR) of 160.5 per cent and a Net Stable Funding Ratio (NSFR) of 115.7 per cent.
Asset quality remained sound, with the gross impaired loans ratio and the share of Stage 2 loans unchanged at 1.4 per cent and 6.6 per cent, respectively.
Insurers and takaful operators (ITOs) remained well-positioned to manage risks related to financial market volatility, rising motor and medical claims costs, and more frequent climate-related events, backed by a strong aggregate capital adequacy ratio of 223 per cent and excess capital buffers of RM42 billion. - Bernama
