Banks with healthy excess capital buffer of RM142bil in July 2023 – Bank Negara

KUALA LUMPUR: The banking system recorded a healthy excess capital buffer of RM142 billion in July 2023, Bank Negara Malaysia (BNM) said.

In its latest Monthly Highlights statement, the central bank said banks’ capital position remained strong to withstand potential stress and provide credit to support economic activities.

The banking system also continued to record healthy liquidity buffers with the aggregate liquidity coverage ratio at 154.8 per cent from June’s 154.3 per cent.

“The aggregate loan-to-fund ratio remained largely stable at 82 per cent (June 2023: 81.6 per cent),” BNM said.

It said domestic financial market developments were driven mainly by financial market expectations that the US Federal Reserve’s monetary policy tightening cycle was nearing its end after the policy rate increase at the July Federal Open Market Committee (FOMC) meeting.

Credit to the private non-financial sector grew by 3.8 per cent as at end-July, underpinned by sustained loan growth in the household segment, but the outstanding business loans expanded at a slower pace of 0.2 per cent versus June 2023’s 0.7 per cent due mainly to a more moderate growth in working capital loans among non-small and medium enterprises (SMEs).

“Growth in outstanding loans to SMEs, however, remained forthcoming (6.7 per cent;June 2023: 6.4 per cent). In addition, outstanding corporate bonds growth continued to increase

(5.2 per cent; June 2023: 4.9 per cent) as bond issuance growth outpaced that of redemptions,” it said.

In addition, growth in outstanding household loans was sustained at 5.2 per cent compared to 5.1 per cent in the previous month, with steady growth registered across most loan purposes.

This was reflective of the higher growth in household loan applications, particularly for the

purchase of houses, cars and personal use.

As for the ringgit, BNM said the ringgit appreciated against the US dollar by 3.1 per cent, higher than the regional average of 1.9 per cent.

The 10-year Malaysian Government Securities (MGS) yields declined marginally by one basis point.

The benchmark FBM KLCI also increased by six per cent compared to the regional average of 3.5 per cent.

Headline inflation declined to 2.0 per cent in July in line with easing monthly price increases and the decline was driven by lower core inflation at 2.8 per cent (June 2023: 3.1 per cent) attributed mainly to lower inflation for food away from home and selected discretionary services. – BK