KUALA LUMPUR: Net financing to the private sector registered an annual growth of 6.3 per cent in August compared with 6.8 per cent in the previous month, said Bank Negara Malaysia (BNM). The central bank said the slower growth was driven mainly by the continued moderation in the growth of loans extended by the banking system and development financial institutions.
“Net outstanding corporate bonds, however, registered stronger growth during the month, in line with higher issuances for working capital and infrastructure projects,” BNM said in its Monetary and Financial Developments for August 2016.
The central bank said the annual growth in outstanding business loans of the banking system was lower at 1.9 per cent during the month (July: 3.7 per cent), mainly reflecting the effect from the high base in August 2015 and large one-off loan repayments by a few of the domestic businesses.
“On a month-on-month basis, the level of loans disbursed to businesses in fact increased, with a larger volume of loans extended to the wholesale and retail trade, and restaurants and hotels; manufacturing; and transport, storage and communication sectors.
“In particular, both the level and annual growth of loans disbursed to the small— and medium-sized enterprises improved during the month,” it said.
For households, outstanding loans of the banking system grew at a stable pace of 5.7 per cent in August (July: 5.7 per cent), with the outstanding loans for the purchase of residential property recording a stable growth of 10.2 per cent (July: 10.2 per cent).
“The level of loan applications and loan approvals increased during the month for both businesses and households.
“On an annual basis, broad money growth increased slightly to 2.4 per cent in August compared with 2.3 per cent in the previous month, driven mainly by the continued extension of credit to the private sector by the banking system and the increase in net foreign assets,” it said.
Interbank rates for all tenures continued to moderate while the weighted average base rate of commercial banks remained steady at 3.60 per cent as at end-August (end-July: 3.62 per cent). Meanwhile, on price conditions, the headline inflation, as measured by the annual percentage change in the Consumer Price Index, was higher at 1.5 per cent in August (July: 1.1 per cent).
BNM said the banking system remained well-capitalised with the Common Equity Tier 1 Capital Ratio, Tier 1 Capital Ratio and Total Capital Ratio stood at 13.4 per cent, 14.3 per cent and 16.8 per cent, respectively. Net impaired loans accounted for 1.3 per cent of net loans while loan loss coverage ratio stood at 89.6 per cent.
The international reserves of BNM amounted to RM392.5 billion as at Sept 15 sufficient to finance 8.1 months of retained imports and was 1.2 times the short-term external debt.
