The central bank said the loan-to-fund ratio remained stable at 81.8% in June, while its stable funding sources remained supportive of credit intermediation in the economy amid sustained growth in deposits.
“Outstanding household loan growth increased 5.9% across all loan types compared to May’s 5%, reflecting higher growth in loan disbursements, especially for cars and houses,” according to the central bank’s monthly highlights report for the month of June.
“For businesses, outstanding loans grew at 5.8% compared with May’s 5.4%, as loan disbursements grew 23%, compared to 20.8% in May,” it reported.
The central bank also reported that net financing grew by 5% in June compared to 4.5% in May, while loan growth outpaced loan repayments by 20%, compared to 23.6% in May.
By sector, BNM said the higher outstanding loan growth reflected stronger growth in wholesale and retail trade, and transport, storage and communication.
On the financial market, BNM said domestic financial market conditions tightened following the sharp rise in US interest rates.
BNM said adjustments in the domestic financial markets “remained orderly” amid positive economic recovery prospects.
“Although foreign portfolio outflows from the domestic bond market were recorded, the 10-year Malaysian government securities (MGS) yields rose by 9 basis points, a smaller increase compared to regional bond yields averaging 21.5 basis points,” the report said.
“The ringgit depreciated by 0.7% in June amid broad US dollar strength, while the FBM KLCI declined by 8% versus the regional average of 7.1%,” it said.
The central bank said asset quality in the banking system remained intact.
Overall, it reported that gross impaired loans ratio increased slightly to 1.7% in June versus 1.6% in May, but net impaired loans ratio remained broadly unchanged at 1%.
“Banks continued to be prudent in loan provisioning to buffer against potential credit losses, with total provisions and regulatory reserves amounting to RM41.1 billion, compared to RM40.7 billion in May.
“Total provisions stood at 1.8% as a share of total banking system loans and 108.5% of impaired loans,” it said.