KUALA LUMPUR: Malaysia’s banking system maintained strong liquidity buffers in December 2024, with an aggregate Liquidity Coverage Ratio (LCR) of 160.7%, up from 147.9% in November, supporting ongoing financial intermediation, Bank Negara Malaysia (BNM) said.
In its Monthly Highlights December 2024 report released on Friday, the central bank noted that the aggregate loan-to-fund ratio remained broadly stable at 83.5% (November 2024: 83.8%).
“The banking system’s resilience continues to be underpinned by sound asset quality, with the overall gross impaired loans ratio improving to 1.4% from 1.5% in November, while the net impaired loans ratio remained steady at 0.9%,” BNM said.
The report also highlighted that the loan loss coverage ratio, including regulatory reserves, remained prudent at 129.1% of impaired loans, up from 128.0% 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.
BNM said that, in December, headline and core inflation declined to 1.7% (November 2024: 1.8%) and 1.6% (November 2024: 1.8%), respectively. Both headline and core inflation averaged 1.8% in 2024.
It said the Index of Wholesale and Retail Trade grew by 3.9% in November 2024 (October 2024: 5.1%).
The central bank said that credit to the private non-financial sector grew by 5.2% (November 2024: 5.4%), amid a moderation in growth for outstanding business loans (5.1%; November 2024: 5.4%) and corporate bonds (3.4%; November 2024: 3.8%).
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
