Wednesday, November 30, 2011

BNM: Banking system fundamentals improved in October

KUALA LUMPUR (Nov 30): Bank Negara Malaysia (BNM) said the country's banking system remained sound in October, with improvements seen in the risk-weighted capital ratio (RWCR) and core capital ratio (CCR).

In a statement on Wednesday, the central bank said the RWCR and CCR improved to 15% and 12.9% respectively.

'This was mainly attributed to a planned capital raising exercise by a bank and half-year profit recorded by the industry. The level of net impaired loans remained stable at 1.9% of net loans, while the loan loss coverage ratio was sustained at a high level of 96.7%,' it said.

As for inflation, it said headline inflation, as measured by the annual percentage change in the consumer price index (CPI), remained at 3.4% in October. The main factors were the food and non-alcoholic beverages category. The prices of vegetables increased due to labour shortages and adverse weather conditions.

BNM said in terms of retail rates, the average base lending rate (BLR) of commercial banks remained unchanged at 6.54% as at end of the month. Retail deposit rates were also stable.

'The annual growth in broad money (M3) moderated slightly to 11.4% in October. On a monthly basis, the expansionary impact of private sector credit and portfolio inflows on M3 was mitigated by higher placement of deposits by the government arising from the proceeds of the issuance of Government securities.

The central bank also said net financing to the private sector grew at a slower pace in October due to a more modest increase in outstanding banking system loans and net issuances of private debt securities (PDS).

'While business loans outstanding moderated slightly due to large repayments during the month, loans disbursed to this sector remained high.

'Loans to households, however, continued to rise steadily, driven mainly by loans for the purchase of residential and non-residential PROPERTIES [] and cars. Loan demand increased in October, with higher loan applications from both businesses and households,' it said.

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