Asset quality of banks remains sound — BNM

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KUALA LUMPUR (May 31): Banks’ asset quality remains sound with overall net impaired loans ratio remaining stable at 1.0%, said Bank Negara Malaysia (BNM) in its “Monthly Highlights — April 2019” released today.

Additionally, the central bank said banks continued to maintain sufficient buffers against potential credit losses, with total provisions at 92.7% of total impaired loans.

Meanwhile, total loans disbursed eased to RM101.6 billion in April 2019 from RM108.7 billion in March 2019, but remained significantly higher than the 2014-2018 monthly average of RM93.0 billion across the business and household segments.

“The growth in outstanding loans during the month moderated to 4.5% compared to 4.9% in March, as loan repayment growth continued to outpace that of disbursement,” said the central bank.

Meanwhile, outstanding business loans grew by 3.2% against 4.1% in March, recording lower growth across many sectors, while outstanding household loans expanded by 5.2% against 5.3% in the previous month.

BNM said the performance of domestic financial markets were affected by both external and domestic developments, which led to broad-based non-resident portfolio outflows from both domestic bond and equity markets.

“Investor sentiments were mainly affected by concerns on geopolitical tensions and the downward revision to the International Monetary Fund’s global growth forecast,” it said.

The potential review on Malaysia’s inclusion in the World Government Bond Index also weighed down sentiments in the domestic bond market, it added.

“Subsequent to these developments, the FBM KLCI declined by 0.1% and the 10-year Malaysian Government Securities yield increased by three basis points during the month,” said BNM.

It added that the ringgit depreciated by 1.3% against the US dollar in April 2019, in line with most regional currencies which moved within a range of -2.4% and +1.3% against the US dollar.