KUALA LUMPUR (June 30): Broad money (M3) growth moderated to 5.5 per cent in May, driven by credit extension to the private sector by the banking system, said Bank Negara Malaysia (BNM).

BNM in a statement today, said the expansion, however, was partially offset by the decline in net foreign assets and net financing to the private sector.

"Net financing to the private sector grew at a slower pace of 9.3 per cent in May, amidst a moderation in the growth of outstanding banking system loans and stable growth in net issuances of private debt securities (PDS)," it said.

The central bank said that the annual growth of outstanding business loans moderated during the month, due to the stronger growth in loan repayments, relative to disbursements.

It said that the annual growth in outstanding household loans was also relatively stable, during the month.

"Overall, loan demand from businesses and households, as reflected by loan applications, was sustained during the period," it added.

On the banking system, BNM said that capitalisation remained strong, with the Common Equity Tier 1 Capital Ratio, Tier 1 Capital Ratio and Total Capital Ratio at 12.1 per cent, 12.8 per cent and 14.5 per cent, respectively.

Net impaired loans, it said, remained at 1.3 per cent of net loans, while loan loss coverage ratio was above 100 per cent.