RAM reaf­firms ‘sta­ble’ out­look

New Straits Times - - Business -

KUALA LUMPUR: RAM Rat­ings has reaf­firmed the Malaysian bank­ing sec­tor’s “sta­ble” out­look as the sec­tor wrapped up a dif­fi­cult 2016 in good shape.

The rat­ing agency said Malaysian banks re­mained re­silient and ex­pected the same per­for­mance this year.

Fi­nan­cial In­sti­tu­tion Rat­ings Co-Head Wong Yin Ching said the econ­omy was poised for a delicate re­cov­ery, with RAM’s gross do­mes­tic prod­uct fore­cast at 4.5 per cent this year ver­sus 4.2 per cent last year.

“We do not fore­see a broadbased im­prove­ment in eco­nomic sen­ti­ment.

Ac­cord­ingly, the bank­ing sys­tem’s loan growth is likely to re­main flat at five to six per cent this year,” he said.

Wong said no­tably, the sys­tem’s as­set-qual­ity in­di­ca­tors had held up well with its gross im­paired loan (GIL) ra­tio re­main­ing at a his­tor­i­cal low of 1.6 per cent as at end-Jan­uary.

This was de­spite pres­sures on cer­tain sec­tors such as those re­lated to au­to­mo­tive, oil and gas, steel and prop­erty de­vel­op­ment, es­pe­cially smaller, cash-strapped play­ers, he said.

Based on its anal­y­sis of more than 700 listed non-fi­nan­cial com­pa­nies, RAM said the over­all debt-ser­vic­ing abil­ity of Malaysian cor­po­rates had re­mained healthy de­spite de­clin­ing prof­itabil­ity.

It added that the credit qual­ity of house­hold loans was ex­pected to re­main strong, sup­ported by a be­nign eco­nomic en­vi­ron­ment and the banks’ gen­er­ally pru­dent un­der­writ­ing stan­dards for this sec­tor.

Res­i­den­tial prop­erty mort­gages, the main­stay of house­hold loans also con­tin­ued to dis­play solid as­set-qual­ity in­di­ca­tors, said RAM. Ber­nama

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