Local banking system asset quality remains healthy — BNM
KUALA LUMPUR: The local banking system asset quality remains healthy in February 2019, as overall gross impaired loans edged slightly higher, contributed by several distressed corporate borrowers.
Nevertheless, the banks’ net impaired loans ratio was stable at 0.9 per cent, said Bank Negara Malaysia ( BNM) in its “Monthly Highlights - February 2019” report.
“Banks have continued to maintain suf f icient buf fers against potential credit losses with total provisions to total loans ratio sustained at 1.4 per cent,” it said.
Meanwhile, headline inflation recorded a smaller negative of - 0.4 per cent during the month compared with - 0.7 per cent in January.
Transport inflation remained negat ive, but its negat ive contribution to inf lation was smaller following the increase in global oil prices in February.
BNM said food inf lation remained stable at 1.0 per cent, while the higher inflation for food away from home was offset by the lower inflation for some fresh food items.
“Excluding the impact of the changes in the consumption tax policy, core inflation rose to 1.6 per cent in February 2019 from 1.5 per cent in January,” it said.
The latest overall Industrial Production Index recorded a slightly lower growth rate of 3.2 per cent year- on-year in January 2019 compared with 3.4 per cent in December 2018.
“The manufacturing sector growth moderated to 4.2 per cent in January 2019 from 4.4 per cent in the previous month, due to weaker production of electronics, in line with other countries that are part of the electrical and electronics global value chain.
“Notably, primary- related production recorded a strong recovery due to better output of palm oil based products,” BNM said.
Month- on-month (m- o-m), net financing recorded a lower annual growth at 5.8 per cent in February compared with 5.9 per cent in January, whi le outstanding corporate bond growth increased to 7.9 per cent m- o-m from 7.3 per cent previously.
Growth in outstanding loans moderated to 5.0 per cent during the month, while outstanding business loan growth moderated to 4.3 per cent m- o-m compared with 4.8 per cent previously, mainly in the mining and quarrying, real estate and primary agriculture sectors.
“Outstanding household loans stood at 5.2 per cent compared with 5.5 per cent in January amid marginal moderation across loan purposes,” it said.
It also said that domestic financial markets improved amid positive investor sentiments as the ringgit appreciated by 0.5 per cent against the US dollar in February, supported by nonresident portfolio inflows to the bond market. — Bernama