KUALA LUMPUR, July 30 — Net financing growth moderated to 4.3 per cent in June 2021 compared to 4.8 per cent in May, reflecting the decline in both outstanding loan growth of 3.4 per cent and outstanding corporate bond growth of 6.9 per cent last month, Bank Negara Malaysia (BNM) said.
The central bank said outstanding household loan growth moderated to 5.2 per cent last month as loan disbursements declined, mainly for the purchase of passenger cars, residential property and credit cards.
However, outstanding business loan growth increased to 0.9 per cent compared to 0.4 per cent in May, reflecting stronger working capital loan growth of 1.6 per cent last month,” it said in a statement today.
Meanwhile, the banking system liquidity position remained strong to support financial intermediation and a healthy liquidity coverage ratio (LCR) level.
“Banks’ funding profile also remained stable amid sustained growth in deposits,” it said, adding that sound risk management practices by banks would support asset quality in the period ahead.
“Overall gross and net impaired loans ratios remain broadly unchanged at 1.6 per cent and 1.0 per cent, respectively amid a marginal monthly increase in impairments,” it said.
The impaired loans ratio, it said, is expected to remain broadly stable in the immediate term as banks continue to facilitate repayment assistance for viable borrowers facing temporary financial difficulties.
“Despite this, banks continue to set aside additional provisions against potential credit losses, which currently stand at 1.8 per cent of total banking system loans,” it said.
Domestic financial markets, BNM said, were affected by both domestic and external factors, while Investor sentiments were affected by uncertainties surrounding the course of the pandemic in the region.
“Consequently, the FBM KLCI declined by 3.2 per cent and the ringgit depreciated by 0.4 per cent against the US dollar. Increased expectations of monetary policy tightening in the United States also led to a broad strengthening of the US dollar,” it said.
According to BNM, the 10-year Malaysian Government Securities yield increased by 4.7 basis points partly due to expectations of higher bond issuances following the announcement of additional fiscal support as domestic Covid-19 cases rose in the second quarter of 2021.
On export, the central bank said the growth moderated but remained robust at 27.2 per cent in June 2021, reflecting broad-based strength across products and markets.
Moving forward, it said exports performance would continue to be underpinned by the rebound in external demand and continued upcycle in global technology, as well as strong demand for non-electrical and electronics manufactured products and higher commodity prices would provide further impetus to export growth.
Nonetheless, it said the trade outlook remains contingent on the path of the Covid-19 pandemic.
BNM said headline inflation declined to 3.4 per cent in June, due mainly to lower inflation in the transport and food and non-alcoholic beverages categories.
“The lower transport inflation (June year-on-year: 16.6 per cent; May: 26 per cent) reflected the dissipating base effect which is expected to further subside in the near term.
“Underlying inflation, as measured by core inflation, declined slightly to 0.7 per cent (May: 0.8 per cent),” it added. — Bernama