Outstanding household loans decreased by 1% month-on-month (m-o-m) to 5.2% in March, supported by growth in loans for car purchases which grew 1.1% m-o-m to 8.7%.
The spike in motor vehicle purchases, due to the ongoing fulfilment of backlog orders, has also contributed to a robust 10.6% growth in the volume index of wholesale and retail trade, a 2.1% m-o-m increase since February.
Meanwhile, household loans for the purchase of securities continued to suffer negative growth, decreasing 3.6% m-o-m to -6.9%.
On the business side, BNM said slower growth in credit to firms has reduced the growth rate of credit to the private non-financial sector by 0.3% m-o-m to 4.2%.
Growth in outstanding corporate bonds moderated to 4.4% from 5.5% in March while outstanding business loan growth was sustained at 2.4%.
Both were supported by the continued growth in working capital (2.2%) and investment-related loans (4.3%).
Banks well-positioned for intermediation
While global financial markets were rocked by several recent banking crises in some major economies, any negative spillovers were effectively contained due to early action by authorities, the report stated.
BNM said banks continue to record healthy liquidity buffers with the aggregate liquidity coverage ratio rising to 157.4% from 152.7% in February.
The aggregate loan-to-fund ratio remains stable at 81.9%, increasing slightly from 81.6% in February.
The report asserted that the banks’ asset quality remains intact, with the loan loss coverage ratio, including regulatory reserves, recording a prudent level of 110.5% of impaired loans.
Overall gross impaired loans stayed stagnant at 1.8% while net impaired loans inched up slightly by 0.1% to 1.2%.
These developments, BNM said, placed banks in strong liquidity and funding positions to support possible intermediation, if needed.
Inflation moderating
Another encouraging indicator highlighted by the monthly report is the decline in both core and headline inflation rates.
Headline inflation dropped 0.3% m-o-m to 3.4% while core inflation contracted slightly by 0.1% m-o-m to 3.8% in March.
BNM reported that the drop in headline inflation was due mainly to lower inflation for fuel, airfares and selected food items, which were correlated with the decrease in global commodity prices.
Lower food-away-from-home inflation, meanwhile, has dragged core inflation down by a slight degree.