Malaysia's Banking System Maintains Healthy Liquidity Position In December 2024 -- BNM

KUALA LUMPUR, Jan 31 (Bernama) -- Malaysia’s banking system maintained strong liquidity buffers in December 2024, with an aggregate Liquidity Coverage Ratio (LCR) of 160.7 per cent, up from 147.9 per cent in November, supporting ongoing financial intermediation, Bank Negara Malaysia (BNM) said.

In its Monthly Highlights December 2024 report released today, the central bank noted that the aggregate loan-to-fund ratio remained broadly stable at 83.5 per cent (November 2024: 83.8 per cent).

“The banking system’s resilience continues to be underpinned by sound asset quality, with the overall gross impaired loans ratio improving to 1.4 per cent from 1.5 per cent in November, while the net impaired loans ratio remained steady at 0.9 per cent,” BNM said.

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The report also highlighted that the loan loss coverage ratio, including regulatory reserves, remained prudent at 129.1 per cent of impaired loans, up from 128.0 per cent in November 2024.

According to the central bank, the higher increase in LCR was primarily due to a decline in expected cash outflows, as interbank borrowing maturities were rolled over beyond 30 days.

“This is in line with banks’ pre-emptive measures to build buffers in preparation for seasonal year-end deposit competition,” it said.

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BNM said that, in December, headline and core inflation declined to 1.7 per cent (November 2024: 1.8 per cent) and 1.6 per cent (November 2024: 1.8 per cent), respectively. Both headline and core inflation averaged 1.8 per cent in 2024.

It said that the Index of Wholesale and Retail Trade (IOWRT) grew by 3.9 per cent in November 2024 (October 2024: 5.1 per cent).

The central bank said that credit to the private non-financial sector grew by 5.2 per cent (November 2024: 5.4 per cent), amid a moderation in growth for outstanding business loans (5.1 per cent; November 2024: 5.4 per cent) and corporate bonds (3.4 per cent; November 2024: 3.8 per cent).

The bank said that the financial markets were largely influenced by expectations for a more gradual US monetary policy easing path in 2025, amid upward revisions in the US Federal Reserve’s growth and inflation forecasts.

“In addition, uncertainties arising from potential trade policies by the US administration continued to weigh on investors’ risk sentiment,” it added.

-- BERNAMA