Banking system registers excess capital buffers of RM129.6 billion in July

KUALA LUMPUR: The banking system recorded excess capital buffers of RM129.6 billion at the end of July 2022, Bank Negara Malaysia (BNM) said.

Capital buffers refer to total capital above the regulatory minimum, which includes the capital conservation buffer of 2.5% and higher bank-specific minimum requirements.

In its July 2022 Monthly Highlights Report released today, the central bank said banks remain well capitalized to support the economic recovery.

“Banks’ capital position remained strong to weather potential stress and continue to support credit flows to the economy.

“Banking system capital ratios improved in July on the back of half-year earnings recognition and valuation gains on available-for-sale financial instruments as bond yields reversed slightly,” he said. he declares.

BNM said good asset quality supported banks’ resilience, although the overall ratio of gross to net impaired loans increased slightly to 1.85% (June-2022: 1.78%) and 1.2 % (June 22: 1.1%), respectively.

The BNM said the loan loss coverage ratio, including regulatory reserves, remains at a conservative level of 112.8% of impaired loans, with total provisions accounting for 1.8% of total loans.

The banking system recorded RM41.1 billion in total provisions and regulatory reserves at the end of July 2022, it said.

Regarding headline inflation at 4.4% in July from 3.4% in June, BNM said this was “anticipated” and was largely reflected in the base effect of the electricity tariff discount put in place. implemented in the third quarter of 2021 (Q3 CY2021) which contributed 0.5 ppt to headline inflation.

“Food and non-alcoholic beverages also contributed to higher inflation, rising 6.9% during the month.

“Underlying inflation also increased to 3.4% in July from 3.0% in June. This increase largely reflects higher prices for discretionary services, such as out-of-home catering (7.8 %), due to improving demand in a high cost environment,” he said. – Bernama

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