In its monthly highlights, the central bank said loan growth moderated to 5.7% from April’s 6%.

Outstanding corporate bonds grew by 4% in May versus April’s 3.4%.

“Outstanding business loans grew at a more moderate pace of 4.8% (April 2024: 5.6%) amid slower growth in working capital loans while investment-related loans expanded,” it said.

Meanwhile, household loan growth increased to 6.3% from 6.2% in April 2024, driven mainly by housing and car loans.

Loan applications and disbursements among household borrowers continued to be forthcoming.

Overall, the banking system continued to record healthy liquidity buffers with an aggregate liquidity coverage ratio of 149.7% (April 2024: 152.2%) while the aggregate loan-to-fund ratio remained broadly stable at 82.2% (April 2024: 82.1%).

The bank’s gross and net impaired loan ratios remained stable at 1.6% and 1%, respectively.

As of end-May 2024, total provisions stood at RM32 billion (April 2024: RM32.4 billion).

BNM said global financial market volatility remains because there is uncertainty over the future path of US monetary policy.

Despite this, several major central banks, including those in Switzerland and Sweden, have begun easing monetary policy due to signs of cooling inflation.

“At home, headline inflation had edged higher to 2% in May against 1.8% in April 2024, driven mainly by selected necessities, notably fresh food and utilities, while core inflation was unchanged at 1.9%,” BNM said.

Against this backdrop, it said the ringgit continued to perform positively by appreciating by 1.2% against the US dollar amid non-resident inflows into the domestic bond and equity markets.