A well-positioned banking system to support the recovery
KUALA LUMPUR: Malaysia’s banking system remains well positioned to support the economic recovery, according to Bank Negara.
The central bank said that in March 2022, banks maintained high capitalization levels, with excess capital reserves of RM125.5 billion.
“Capital ratios declined slightly, primarily due to valuation adjustments of available-for-sale financial instruments in a rising bond yield environment,” he said in his March 2022 Monthly Highlights Report. .
The central bank added that the bank’s asset quality remained strong in March 2022, with overall gross and net impaired loan ratios remaining broadly stable at 1.5% and 0.9%, respectively.
He said bank provisioning levels remained high as banks continued to be cautious, with a loan loss coverage ratio of 133% compared to an average of 129% in 2020-21.
“Total provisions fell slightly to 1.8%, as a percentage of total banking system loans, from 1.9% in February,” he said.
In domestic financial markets, he said conditions have tightened, following Malaysian 10-year government bond yields rising 20.6 basis points and the FBM KLCI falling 1.3 percent. .
The local financial market was also pulled by tighter global financial conditions and geopolitical developments, with global financial market sentiments affected by the faster-than-expected path of monetary policy normalization by the US Federal Reserve and the conflict. in Ukraine.
“The corresponding general strength of the US dollar during the month also led to a marginal depreciation of the ringgit,” he said.
Despite the weaker performance of financial markets, he said adjustments remained orderly amid ample trading liquidity. — Bernama