BNM: Net financing growth continues to support economic activity

BNM: Net financing growth continues to support economic activity

KUALA LUMPUR,. Malaysia’s net financing growth continued to support economic activities, as it grew by 7 per cent in September, compared to 7.4 per cent in August, says Bank Negara Malaysia (BNM).

In its “Monthly Highlights-September 2018” report released today, BNM attributed the growth to outstanding corporate bonds of 10.8 per cent In September from 13.4 per cent in August, and outstanding banking system loans, which improved to 5.7 per cent in September versus 5.4 per cent in August.

“The outstanding loans growth for businesses and households in September increased to 4.5 per cent compared to 3.8 per cent and sustained at 6 per cent respectively.

“The growth of household loan applications and approvals for the purchase of passenger cars also moderated in September to 6.7 per cent and 32 per cent respectively mainly due to the post tax holiday period,” it said.

Meanwhile, BNM said domestic financial markets continued to remain orderly despite non-resident portfolio outflows in early September which were due to risk-off sentiments primarily arising from global trade tensions.

“The ringgit depreciated by 0.8 per cent amid non-resident outflows and continued US dollar strengthening, which was supported by the positive economic outlook, and stronger employment and wage data releases from the US.

“Meanwhile, the benchmark FTSE Bursa Malaysia KLCI declined by 1.5 per cent and the 5-year MGS yield increased by 5.7 basis points during the month,” it said.

The central bank also said the banking system asset quality remains sound as in September, the net impaired loans ratio declined marginally to 0.9 per cent due to write-offs.

“Banks continued to maintain sufficient buffers against potential credit losses with loan loss coverage ratio sustained at 96 per cent of total impaired loans,” it said.

It also said that inflation remained low in September at 0.3 per cent in September as the upward impact from the implementation of Sales and Services tax was offset by lower transport inflation.

The SST pass-through was more evident for some taxable services, such as paid television services and fast food.

“Excluding the impact of the changes in tax policy, core inflation remained stable at 1.4 per cent in September,” it said.

BNM also said that exports registered marginal contraction of 0.3 per cent in August due to moderation in manufactured exports and decline in commodity exports.

“The decline in commodities export was due partly to supply disruptions in liquefied natural gas (LNG) production.

“Going forward, exports are expected to turn around to positive growth due to the pickup in electrical and electronics re-export and the gradual recovery in commodity exports,” it said. — Bernama