Slower growth in credit to the private non-financial sector was reported at the end of April attributed mainly to slower growth in credit to businesses.
The rate of credit to the private non-financial sector grew by 3.7% as at end-April down from 4.1% in March.
Bank Negara Malaysia (BNM), in its April 2023 Monthly Highlights Report, said outstanding business loans grew at a slower pace of 1.0% in April 2023 compared with 2.4% in March 2023 amid weaker growth in working capital loans, particularly in the non-SME segment.
Nonetheless, growth in outstanding corporate bonds was sustained at 4.4%.
Households’ borrowings outstanding loan growth expanded by 4.9% (March: 5.1%), supported by higher growth in consumption-related credit (5.2%; March: 4.8%). This reflected sustained growth in credit card spending and loans for the purchase of cars. The growth in loans for the purchase of houses moderated slightly to 6.7% (March: 7.0%).
BNM cited headline inflation continued to moderate to 3.3% (March: 3.4%). This decline was mainly due to lower food inflation, such as fresh vegetables, and lower fuel inflation given the lower RON 97 price compared to last year (April 2023: RM 3.35/litre; April 2022: RM 3.84/litre).
“Underlying inflation as measured by core inflation also declined to 3.6% (March: 3.8%) mainly due to lower inflation for some discretionary services, particularly food away from home,” it said.
The Central Bank reported that Malaysia’s exports contracted by 17.4% (March: -1.4%) in April 2023 reflecting weaker external demand and decline in commodity prices while manufactured export growth was weighed mainly by manufactures of metal and chemical products.
Meanwhile, commodities exports declined due to lower shipments of palm oil and crude petroleum.
Moving forward, the broad slowdown in exports is expected to continue. This is in tandem with the performance of regional economies and slower global growth outlook amid high base effects from robust global demand for goods last year.
BNM said: “In April, global investors maintained a cautious outlook, particularly for advanced economies, as the IMF downgraded its global economic growth expectations. At the same time, global financial conditions continued to be affected by US banking sector developments, as policy rate expectations for the US Federal Reserve shifted lower.”
Reflecting global investors’ mixed sentiment, the 10-year MGS yields declined by 18 bps (regional4 average: -8.9 bps). The ringgit depreciated against the US dollar by 1.1%, in line with the movement in regional currencies (at an average of -0.8%).
Banks remain well-capitalised recording strong capital buffers to absorb any unexpected shocks while preserving their ability to provide financing to the economy. The banking system excess capital buffer which stood at RM136.2 million.
Banks also were reported to have maintained strong liquidity and funding positions to support intermediation recording the healthy liquidity buffers with an aggregate Liquidity Coverage Ratio at 154.3% (March: 157.5%).
The aggregate loan-to-fund ratio remained largely stable at 82.4% (March: 85.1%).
