Speaking at the 2022 Banking and Finance Summit today, Wahid said this was supported by healthy capital and liquidity buffers to facilitate financial intermediation activities.
He cited statistics by Bank Negara Malaysia, which showed that the banking system’s core equity tier 1 capital ratio of 15.2% as of Dec 31, 2021 was significantly higher than the 9.05% core capital ratio as of Dec 31, 1997 and 10.61% as of Dec 31, 2008.
He also cited the significant improvement of the asset quality of the banks, with the net impaired loans ratio improving from a high of 13.59% in 1998 to 2.24% in 2008. It was 0.9% as of Dec 31, 2021.
“With the loan-to-fund ratio remaining broadly stable at 82.3% as of Dec 31, 2021, there is sufficient liquidity for the banks to fund future loan growth in order to expand the economy further,” he said at the summit organised by KSI Strategic Institute.
The former economic affairs minister also spoke about how Malaysian banks and financial service companies were well represented in the stock market, with significant weighting in both the FBM KLCI and the FTSE4Good Bursa Malaysia sustainability index.
“The eight banking stocks alone (Maybank, Public Bank, CIMB, HLB, RHB, AmBank, Affin and Alliance) have a combined market capitalisation of RM334 billion, or 18% of the total market capitalisation of RM1,806 billion as of end-February,” he said.
On the environmental, social and governance (ESG) front, Wahid said the stocks of the financial services make up 41.3% of the FTSE4Good Bursa Malaysia index weightage as of March 15, compared to 11% for telecommunications and media, 9.6% for utilities and 9.5% for consumer products and services.
He anticipated these financial service firms to play a crucial role in pushing corporate Malaysia to commit to net-zero greenhouse gas emissions by 2050.
He also expressed optimism that the country’s gross domestic product (GDP) can rebound to pre-pandemic levels based on the economic recovery observed in 2021 and with the reopening of the borders from this Friday.
Malaysia, he added, is poised to achieve its forecast GDP of between 5.5% and 6.5% this year. This corresponds to the International Monetary Fund and World Bank predictions of 5.7% and 5.8% respectively.