The banking system remained well-capitalised in September with the risk-weighted capital ratio and core capital ratio at 14.8 per cent and 13.1 per cent, respectively, says Bank Negara Malaysia (BNM). In a statement Friday, the central bank said the level of non-performing loans (NPLs), including impaired loans, improved in September to account for two per cent of net loans, attributable to lower amount of new defaults and management of impaired assets by a banking institution.
BNM said loan loss coverage remained above 90 per cent. In terms of retail interest rates, it said the average base lending rate (BLR) of commercial banks was unchanged at 6.27 per cent while retail deposit rates were also stable.
Broad money (M3) increased during the month, reflecting mainly higher credit extension by the banking system to the private sector, it said, adding that the increase in M3 was also supported by foreign inflows.
Net financing to the private sector increased by RM10.4 billion in September due mainly to higher private debt securities (PDS) issuances and loan disbursements during the month.
PDS issuances increased mainly to a large scale issuance by a telecommunications company.
Loans outstanding to businesses expanded reflecting mainly higher loans extended to the construction, manufacturing and finance, insurance and business services sectors. While household loans also continued to increase and loan applications from businesses and households moderated from their relatively high levels in September.
During the month, the central bank said the ringgit's performance against the currencies of Malaysia's major trade partners were mixed. It said the ringgit appreciated against the US dollar and Japanese yen but depreciated against the Chinese renminbi, Singapore dollar and the euro. The positive growth outlook for Asia relative to the developed economies provided impetus to the appreciation of regional currencies against the US dollar.
Investors expectation for further monetary easing by the US Federal Reserve also lifted sentiment towards regional financial markets. However, in October, the ringgit depreciated against Malaysia's major trading partners as country specific factors led to a great appreciation of these currencies against the ringgit.
The international reserves of BNM stood at RM322.7 illion (equivalent to US$104.6 billion) as at October 15, sufficient to finance 8.7 months of retained imports and was 4.5 times the short-term external debt.