KUALA LUMPUR, May 20 — Banks saw their yearly loan growth shrunked 5.2 per cent in March with personal loans accounted for the sharpest decline at -18.2 percentage points year-on-year, official figures released today showed.

Slightly over RM107 billion in loans were approved within that period, a record low to culminate in an already slowing lending momentum from the final half of 2019. 

But lenders are likely to welcome March’s sluggish figure, which jumped 8.8 per cent from the previous month. Total loans disbursed in March amounted to a meagre RM95.3 billion.

Local banks have already trimmed their loan growth targets during last year’s quarterly earnings estimation, way ahead of the Covid-19 outbreak that forced the National Security Council to impose movement restrictions that same month, which effectively paralysed the economy.

This was despite Bank Negara Malaysia’s (BNM) November move to reduce the statutory reserve requirement (SRR) ratio to three from 3.5 per cent, meant to give banks more liquidity and unlock some RM7.35 billion into the banking system.

But banks are likely to remain resilient.

Earlier this month, Bank Negara Malaysia deputy governor, Jessica Chew, expressed confidence that creditors are going into the coronavirus crisis from a position of strength.

Last year, local banks had excess capital of RM121 billion compared to just RM39 billion in 2018, with a total capital ratio of 18.4 per cent in 2019, Chew said.

This makes them capable of withstanding potential credit and market losses, the BNM deputy governor was quoted as saying.

Total unpaid loan year-on-year stood at nearly RM40 billion, Department of Statistic Malaysia’s April data showed.

The figure could be lower if not for the six-month moratorium on loan payments rolled out as part of efforts to mitigate Covid-19’s economic fallout.

Total loans unpaid by sectors was RM28.3 billion in March, an increase of 11.8 per cent year on year and up 1.6 per cent from March.

Meanwhile total loans unpaid by households was RM11.5 billion, up 14.3 per cent from the same month last year, and up 2.8 per cent from March.