KUALA LUMPUR (March 31): The Malaysian banking system registered an overall loan growth of 5.3% year-on-year in February 2017, lower than the 5.6% recorded in the previous month.

In comparison, January's growth was a pick-up from the 5.3% registered in December 2016.

Net financing to the private sector registered an annual growth of 5.4% in February, compared with 5.8% in January, according to Bank Negara Malaysia’s (BNM) statement on monetary and financial developments released today.

This was driven by a moderation in both the growth of loans extended by the banking system and development financial institutions (DFIs), and in net outstanding issuances of corporate bonds during the month, it said.

Outstanding business loans of the banking system grew at a stable pace of 5.4%, unchanged compared with 5.4% in January. The growth was driven by year-on-year expansions in the manufacturing, finance, insurance and business services, transport, storage and communication sectors.

For households, outstanding loans from the banking system grew at a slightly slower pace of 5.1% in February, compared with 5.2% in January.
"Overall loan demand increased during the month with a higher level of loan applications, especially from businesses,” added BNM.

Meanwhile, broad money (M3) grew at a more moderate pace of 3.6% on an annual basis in February, compared with 4.4% in January.

The broad money expansion continued to be supported by the extension of credit to the private sector and higher net claims on the government, according to the central bank.

"This expansion, however, was partially offset by the decline in net foreign assets due to net capital outflows during the month and the continued growth of Islamic Investment Accounts, as reflected in other influences," BNM added.