Banks’ asset quality remains sound, says Bank Negara

PETALING JAYA: Banks’ asset quality remained sound in February, with the overall net impaired loan ratio remaining stable at 1%, Bank Negara says. “Banks continued to maintain sufficient buffers against potential credit losses with total provisions (including the regulatory reserve) at 125.1% of total impaired loans,” it said.

In its monthly highlights for February, Bank Negara said net financing growth rose 5% in February (January: 4.7%) due to the faster expansion in outstanding loans of 3.9% (January: 3.5%). Outstanding corporate bond growth also increased slightly to 8.2% (January: 8.0%). It also said outstanding business loan growth increased in February to 3.6% from January’s 2.5%, due mainly to lower repayments.

Disbursements were broadly sustained during the month. “However, outstanding household loan growth declined (February: 3.7%, January: 4.5%) due to lower disbursements for credit cards, and securities and car loans,” it said.

It said exports contracted 1.5% in January 2020 (December 2019: +2.7%) due to slower growth in manufactured exports and a sharper decline in commodity exports.

Bank Negara also pointed out there was risk aversion in domestic financial markets. In February, domestic financial markets experienced non-resident outflows amid higher global risk aversion, following the worsening of the Covid-19 pandemic. As a result, the ringgit depreciated by 3.3%. The FBM KLCI declined by 3.2% to 1,483 points as at end-february.