The only segment that increased was household loan, which expanded by 5.3% last month, says BNM

By NG MIN SHEN / Pic By MUHD AMIN NAHARUL

Outstanding loan growth of the domestic banking system moderated to 5.5% in March this year from 5.8% in February 2019, Bank Negara Malaysia (BNM) said in its monthly highlights on Tuesday.

The central bank stated that net financing, which refers to outstanding banking system loans excluding development financial institutions and outstanding corporate bonds, recorded an annual growth of 5.5% in March 2019.

Outstanding loan growth came in at 4.9% for March against 5% in February, while outstanding corporate bond growth slipped to 7.1% in March from 7.9% in February 2019.

Outstanding business loans grew by 4.1% in March versus 4.3% in February, mainly driven by lower growth in the construction, finance, insurance and business services, and real estate sectors.

The only segment that increased was outstanding household loan, which expanded by 5.3% in March 2019 compared to 5.2% in February.

Financial institutions held excess capital buffers of RM154 billion as at March 2019. Banks are required to maintain capital buffers at a minimum of 8% of their risk-weighted assets.

“The increase in Common Equity Tier 1 capital in the first quarter of 2019 was mainly attributable to an increase in retained earnings, as several banks recognised profits for the financial year ended 2018,” BNM said.

On the financial markets side, the ringgit depreciated by 0.3% against the US dollar in March, alongside most regional currencies, which fell between 0.5% and 1.7%.

“This was driven mainly by non-resident outflows from the equity market as investor sentiment was subdued following concerns over the global growth and geopolitical outlook, as well as domestic factors. Consequently, the FTSE Bursa Malaysia KLCI declined by 3.8%,” BNM said.

The 10-year Malaysian Government Securities yield fell 13 basis points, driven by continued non-resident inflows of RM2.7 billion into the government bond market.

This was in line with the downward trend in global sovereign bond yields, amid easier global financial conditions.

Meanwhile, headline inflation rose to 0.2% in March this year from -0.4% in February, reflecting the less negative transport inflation of 3% versus -6.8% the previous month.

“This was due to the higher global oil prices which led to higher domestic fuel prices. Inflation in other categories were relatively stable,” the central bank stated.

Core inflation — which excludes price-volatile and price-administered items, and the estimated direct impact of tax policy changes — was unchanged at 1.6%.

The index of wholesale and retail trade slowed in February with 6.4% growth against a 7.9% expansion in January, reflecting broad-based moderation across all key segments.

The retail segment remained the key growth driver, as a result of resilience in household consumption.

“However, growth in the wholesale segment softened further in tandem with slower manufacturing and trade activity,” BNM said.