BNM: Malaysian banking system remains well capitalized to support economic recovery

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KUALA LUMPUR (June 30): Malaysia’s banking system remains well capitalized to support the economic recovery, Bank Negara Malaysia (BNM) said.

The central bank said capital ratios rose slightly in May 2022, driven by valuation gains on available-for-sale financial instruments as bond yields temporarily declined over the period.

“As of end-May 2022, the banking system recorded RM121.5 billion of excess capital buffers,” BNM said in its monthly highlights for May 2022 report released Thursday, June 30.

The central bank said the overall gross and net impaired loan ratios remained broadly stable at 1.6% and 1% respectively, reflecting the marginal increase in impairments in the corporate and household segments, following the reduction repayment assistance measures since the first quarter of 2022.

“Total provisions remained at a conservative level, representing 1.8% of total banking system loans and 109.1% of impaired loans.

“At the end of May 2022, total provisions and regulatory reserves stood at RM40.7 billion (end of April: RM40.2 billion),” he added.

On the domestic financial market, BNM said market adjustments remained orderly, following a sustained decline in the yield on 10-year Malaysian government securities of 21 basis points (bps) during the month. by foreign portfolio inflows into the domestic bond market.

By contrast, regional bond yields rose 24.5 basis points on average, he said.

The central bank said the local financial market was also being driven by tighter global financial conditions due to expectations for faster and larger policy rate hikes by advanced economies, particularly the United States, amid the global slowdown. higher and more prolonged inflationary pressures.

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