Malaysia witnessed sustained credit growth in June 2023 despite the slower growth in business loans, said Bank Negara Malaysia (BNM).
The central bank said credit to the private non-financial sector was broadly sustained at 3.9 per cent compared with four per cent in May 2023 although credit to businesses grew at a slower pace of 2.6 per cent versus 2.8 per cent previously.
“Growth in outstanding business loans moderated to 1.0 per cent from 1.6 per cent in May, following slower growth in working capital loans among non-small and medium enterprises (SMEs),” it said in its Monthly Highlights report for June 2023 today.
BNM noted the growth in outstanding corporate bonds, however, improved slightly to 4.9 per cent (May 2023: 4.6 per cent).
For households, outstanding loan growth was unchanged at 5.1 per cent in June, with sustained growth across most loan purposes.
Notwithstanding this, it said, loan applications recorded slower growth, particularly for the purchase of houses and personal use, partly due to the high base effect from a strong increase in June 2022.
BNM also disclosed that Malaysian banks maintained strong liquidity and funding positions to support intermediation.
“Banks continued to record healthy liquidity buffers with the aggregate liquidity coverage ratio at 155.3 per cent in June (May 2023: 151 per cent),” it said.
The aggregate loan-to-fund ratio remained broadly stable at 81.6 per cent (May 2023: 81.8 per cent).
As for the asset quality in the banking system, the central bank said it remained intact as overall gross and net impaired loans ratios remained broadly unchanged at 1.75 per cent in June 2023 (May 2023: 1.80 per cent) and 1.09 per cent (May 2023: 1.10 per cent), respectively.
Loan loss coverage ratio including regulatory reserves also continued to be at a prudent level of 116.2 per cent of impaired loans, with total provisions accounting for 1.6 per cent of total loans, BNM noted.
It said domestic financial markets remained mostly driven by external factors while global financial sentiments were weighed down by concerns over the global growth outlook due to weaker-than-expected economic recovery in China.
This was further compounded by slower economic activity in Europe and weak corporate earnings, BNM shared.
It also highlighted that the ringgit had depreciated against the US dollar by 1.3 per cent in comparison with the regional average of -0.1 per cent while the FTSE Bursa Malaysia KLCI declined by 0.8 per cent in June versus the regional average of -0.1 per cent.
Meanwhile, in tandem with global bond yields, the 10-year Malaysian Government Securities yields rose by 15 basis points, following an indication of a tighter monetary policy stance going forward by the US Federal Reserve, BNM said.
As for the headline inflation, the central bank said it continued to decline to 2.4 per cent in June, largely due to lower inflation for core Consumer Price Index components (-0.3 percentage point) and fuel (-0.1 percentage point).
On another note, it said the moderation in core inflation to 3.1 per cent in June 2023 from 3.5 per cent in the preceding month was mainly due to lower inflation for some discretionary services, particularly food away from home.
BNM also shared that Malaysia’s exports also contracted by 14.1 per cent in June 2023 (May 2023: -0.9 per cent), reflecting weaker external demand, a decline in commodity prices and a high base effect from 2022.
It added that manufactured export growth was weighed down mainly by petroleum products and palm oil-based products while commodity exports declined due to lower shipments of palm oil, liquefied natural gas and crude petroleum.
