Broad money growth stable, driven by credit to private sector

PETALING JAYA: Bank Negara Malaysia (BNM) said broad money, which is an indicator of the country’s money supply, recorded a stable annual growth at 3.0%, driven by the extension of credit to the private sector by the banking system.

The expansion, however, was partially offset by the continued growth of Islamic Investment Accounts, as reflected in other influences, and the decline in net foreign assets due to net capital outflows in December 2016.

In a statement released yesterday, BNM said net financing for the private sector registered an annual growth of 5.5% in December 2016 against 6.7% in November.

This was due to the moderation in the growth of net outstanding corporate bonds amid stable growth of loans extended by the banking system and development financial institutions during the month. The moderation in the growth of corporate bond issuances in December 2016 was mostly due to the higher base recorded in December 2015 given large one-off issuances by a few companies.

Outstanding business loans of the banking system, however, recorded a higher annual growth of 5.0% (November: 4.6%), with the growth driven by the year-on-year expansion of loans to most major sectors such as the wholesale and retail trade, restaurants and hotels; finance, insurance and business services; and transport, storage and communication sectors.

For households, outstanding loans of the banking system grew at a slightly slower pace of 5.3% in December (November: 5.4%). While the level of loan approvals for both businesses and households remained stable at RM29.3 billion (November: RM29.9 billion), the level of loan applications moderated slightly during the month.

In the retail market, the weighted average base rate of commercial banks remained steady at 3.61% in December from 3.62% in November, and the weighted average lending rate on outstanding loans was stable at 5.21%.