KUALA LUMPUR, March 31 — Headline inflation moderated to 2.2 per cent in February from the 2.3 per cent recorded in January, reflecting lower inflation in the transport segment at 3.9 per cent from 6 per cent in January, Bank Negara Malaysia (BNM) said.
The underlying inflation, as measured by core inflation, was higher at 1.8 per cent during the month, higher than January’s 1.6 per cent, driven mainly by food away from home and rental.
“Export growth remained strong in February, growing by 16.8 per cent (January: 23.9 per cent), reflecting continued strength across Malaysia’s export products,” BNM said in its monthly highlights for the month of February 2022.
Moving forward, the export sector would continue to benefit from the expansion in external demand and global technology upcycle, the central bank said.
In addition, high commodity prices will provide support to export growth.
Nonetheless, the trade outlook remains contingent on the path of the pandemic, global supply chain disruptions as well as risks surrounding the global growth outlook amid the military conflict in Ukraine.
BNM said net financing growth was sustained at 4.8 per cent as outstanding corporate bonds growth increased (February: 5.2 per cent; January: 5.0 per cent) while outstanding loan growth was stable at 4.7 per cent.
Outstanding household loans continued to expand at 4.7 per cent, “reflecting broadly sustained growth across most purposes,” while for businesses, outstanding loan growth increased (February: 5.5 per cent; January: 5.3 per cent) amid higher lending to SMEs and sustained growth in working capital loans.
“Growth in total loan disbursements moderated in February but remained high (February: 12.3 per cent; January: 21.5 per cent; 2017-19 average: 5.0 per cent), as disbursements growth for businesses continued to be elevated,” the central bank said.
Domestic financial markets were orderly amid ongoing geopolitical conflict, but it noted that “the military conflict in Ukraine has affected global financial markets, resulting in increased volatility in February.”
“Spillovers to domestic financial markets and broader financial conditions were however contained, reflecting positive investor sentiments, given Malaysia’s position as a net commodities exporter amid higher global commodity prices,” it said. “The domestic equity market had increased, driven by the plantation sector. The FBM KLCI rose by 6.3 per cent to 1,608 points as at end-February, the 10-year MGS yields declined by 0.6 basis point while the ringgit depreciated by 0.3 per cent”.
As for the banking system, BNM said it has continued to maintain healthy liquidity positions with the liquidity coverage ratio remaining strong at 151.3 per cent with the banks’ funding profile remaining stable, supported by sustained growth in deposits.
Gross and net impaired loans ratios remained low at 1.5 per cent and 0.9 per cent, respectively.
“Banks continue to be prudent in loan provisioning to buffer against potential credit losses, with total provisions and regulatory reserves amounting to RM41.1 billion (January 22: RM40.8 billion),” the central bank said, adding that total provisions stood at 1.9 per cent as a share of the total banking system loans.
— Bernama
