Net Financing Growth Remains Supportive Of Economic Activity, Says Malaysia's Central Bank

KUALA LUMPUR, Sept 29 (Bernama) -- The outstanding loan growth of the banking system increased to 5.8 per cent in August 2017, compared with 5.6 per cent in July, driven by businesses with an expansion in the construction, and finance, insurance and business services sectors. In its Monthly Highlights August 2017 released here, Bank Negara Malaysia (BNM or Malaysia’s Central Bank) said the net financing growth was sustained at 6.6 per cent in August as against 6.8 in the previous month while growth in net outstanding issuances of corporate bonds moderated to 9.0 per cent from 10.6 per cent previously. The central bank said asset quality of the banking system remained sound with the level of impaired loans remaining stable at 1.2 per cent of total loans net of individual impairment provisions. It added banks continued to maintain sufficient buffers for potential credit losses, with the loan loss coverage ratio currently at 81.4 per cent. Meanwhile, in August, domestic financial markets were mainly supported by positive sentiments arising from both external and domestic factors. “Globally, concerns on softening inflation in the US led to a broad weakening of the US dollar and increased appetite for regional financial assets, including those in Malaysia. “While domestically, better-than-expected Gross Domestic Product in the second quarter of 2017 and corporate earnings provided additional support to sentiments,” said BNM. However, investors remained cautious during the month amidst escalating geopolitical tensions, it added. On exports, BNM said the growth in exports accelerated to 30.9 per cent in July 2017 (June: 9.9%), driven by electric & electronics, petroleum products and chemicals & chemical products. “Moving forward, export growth will remain supported by the favourable global growth prospects,” it said. -- BERNAMA