The Malaysian central bank said the expectation for higher US interest rates was supported by data indicating the resilience of the US economy.

“Against this backdrop, the 10-year Malaysian Government Securities (MGS) yields rose by 13 basis points (bps) (in September) against the regional average of 28 bps,” it said in a statement on financial and economic highlights for September.

On the ringgit, BNM said the ringgit depreciated by 1.1% last month compared with the regional average of 1.8% amid extended US dollar strength, while the FTSE Bursa Malaysia KLCI (FBM KLCI) reduced by 1.9% in the same period on weakened investor sentiment.

“Banks maintained strong liquidity and funding positions to support intermediation and banks continued to record healthy liquidity buffers with the aggregate liquidity coverage ratio at 151.5% in September (August 2023: 150.3%).

“The banking system loan-to-fund ratio remained broadly stable at 82.5% in September (August 2023: 82.3%),” BNM noted.

On asset quality in the banking system, the central bank said it remained intact, with overall gross and net impaired loans ratios remaining broadly stable at 1.72% (August 2023: 1.78%) and 1.07%(August 2023: 1.11%) respectively in September.

“The loan loss coverage ratio (including regulatory reserves) continued to be at a prudent level of 117.5% of impaired loans.

“Total provisions to total loans ratio remained on a steady moderating trend, aided by loan growth and provision writeback following improvement in asset quality,” it stated.