Growth in loan payment moderated in February to 12.3%

by FAYYADH JAAFAR / pic by TMR FILE

GROWTH in total loan disbursements moderated in February but remained high (February: 12.3%; January: 21.5%;), as disbursements growth for businesses continued to be elevated, Bank Negara Malaysia said in a statement yesterday. 

Overall net financing growth was sustained at 4.8%, as outstanding corporate bonds growth increased (February: 5.2%; January: 5%) while outstanding loan growth was stable at 4.7%. 

“Outstanding household loans continued to expand at 4.7%, reflecting broadly sustained growth across most purposes. 

“While for businesses, outstanding loan growth increased (February: 5.5%; January: 5.3%) amid higher lending to small and medium enterprises (SMEs) and sustained growth in working capital loans (February: 8.3%; January: 8.2%; 2017-2019 average: 4.3%),” the central bank said in its monthly highlights for February yesterday. 

It added gross and net impaired loans ratios remained low at 1.5% and 0.9% respectively. 

Total provisions stood at 1.9% as a share of total banking system loans. The banking system continued to maintain healthy liquidity positions with the liquidity coverage ratio remaining strong at 151.3% with the banks’ funding profile remaining stable, supported by sustained growth in deposits.

“Banks continue to be prudent in loan provisioning to buffer against potential credit losses, with total provisions and regulatory reserves amounting to RM41.1 billion (January 2022: RM40.8 billion),” the central bank said, adding that total provisions stood at 1.9% as a share of the total banking system loans. 

Headline inflation moderated to 2.2% in February from the 2.3% recorded in January, reflecting lower inflation in the transport segment at 3.9% from 6% in January. 

According to BNM the underlying inflation, as measured by core inflation, was higher at 1.8% during the month, higher than January’s 1.6% driven mainly by food away from home and rental. 

“Export growth remained strong in February, growing by16.8% (January: 23.9%), reflecting continued strength across Malaysia’s export products,” BNM added. 

Moving forward, the export sector would continue to benefit from the expansion in external demand and global technology upcycle, it said. 

In addition, high commodity prices will provide support to export growth. 

Nonetheless, the trade outlook remains contingent on the path of the pandemic, global supply chain disruptions as well as risks surrounding the global growth outlook amid the military conflict in Ukraine. 

It added that net financing growth was sustained at 4.8% as outstanding corporate bonds growth increased (February: 5.2%; January: 5%) while outstanding loan growth was stable at 4.7%. 

“Outstanding household loans continued to expand at 4.7%, reflecting broadly sustained growth across most purposes, while for businesses, outstanding loan growth increased (February: 5.5%; January: 5.3%) amid higher lending to SMEs and sustained growth in working capital loans. 

The bank also added that its international reserves have remained usable despite the recent escalation of the military conflict in Ukraine, which has resulted in increased geopolitical tensions and the imposition of sanctions by the US and European Union on Russia. 

The only contingent short-term net drain on foreign currency assets as at end-February 2022 are government guarantees of foreign currency debt due within one year, amounting to US$401.8 million (RM1.68 billion). 

In its detailed disclosure of international reserves as at end-February 2022, BNM said there are no foreign currency loans with embedded options, no undrawn, unconditional credit lines provided by or to other central banks, international organisations, banks and other financial institutions. 

“BNM also does not engage in foreign currency options vis-à-vis ringgit. 

“Overall, the detailed breakdown of international reserves under the International Monetary Fund Special Data Dissemination Standard format indicates that as at end-February 2022, Malaysia’s international reserves remain usable,”it said.