Net financing growth continues to support economic activity

KUALA LUMPUR: Malaysia’s net financing growth has continued to support economic activities, as it grew by 7.0 per cent in September from 7.4 per cent in August, says Bank Negara Malaysia (BNM).

BNM, in its “Monthly Highlights-September 2018” report released yesterday, attributed the growth to outstanding corporate bonds of 10.8 per cent in September compared with 13.4 per cent in August, and outstanding banking system loans improved to 5.7 per cent from 5.4 per cent.

It said the outstanding loan growth for businesses increased to 4.5 per cent in September from 3.8 per cent in August, while that of households sustained at 6.0 per cent from 6.1 per cent.

“The growth of household loan applications and approvals for the purchase of passenger cars also moderated in September to 6.7 per cent and 32 per cent, respectively, mainly due to the post tax holiday period,” it said.

Meanwhile, BNM said domestic financial markets continued to remain orderly despite nonresident portfolio outflows in early September due to risk-off sentiments, primarily arising from global trade tensions.

“The ringgit depreciated by 0.8 per cent amid non-resident outflows and continued US dollar strengthening, which was supported by the positive economic outlook and stronger employment and wage data releases from the US.

“Meanwhile, the benchmark FTSE Bursa Malaysia KLCI declined by 1.5 per cent and the five-year MGS yield increased by 5.7 basis points during the month,” it said.

The central bank also said the banking system asset quality remained sound as in September, with the net impaired loans ratio declined marginally to 0.9 per cent due to write-offs.

“Banks continued to maintain sufficient buffers against potential credit losses with loan loss coverage ratio sustained at 96 per cent of total impaired loans,” it said.

BNM said inflation remained low in September at 0.3 per cent as the upward impact from the implementation of the Sales and Services tax was offset by lower transport inflation.

The SST pass-through was more evident for some taxable services, such as paid television services and fast food.

“Excluding the impact of the changes in tax policy, core inflation remained stable at 1.4 per cent in September,” it said.

B NM said that exports registered marginal contraction of 0.3 per cent in August due to moderation in manufactured exports and decline in commodity exports.

“The decline in commodities export was due partly to supply disruptions in liquefied natural gas production.

“Going forward, exports are expected to turn around to positive growth due to the pickup in electrical and electronics reexport and the gradual recovery in commodity exports,” it said. — Bernama