KUALA LUMPUR, Oct 31 — Global financial conditions have tightened on rising expectations for a “higher-for-longer” interest rate path forecast by the US central bank, said Bank Negara Malaysia (BNM).
The Malaysian central bank said the expectation for higher US interest rates was supported by data indicating the resilience of the US economy.
“Against this backdrop, the 10-year MGS yields rose by 13 basis points (bps) (in September) against the regional average of 28 bps,” it said in a statement on financial and economic highlights for September.
On the ringgit, BNM said the ringgit depreciated by 1.1 per cent last month compared with the regional average of 1.8 per cent amid extended US dollar strength, while the FBM KLCI fell 1.9 per cent in the same period on weakened investor sentiment.
“Banks maintained strong liquidity and funding positions to support intermediation and banks continued to record healthy liquidity buffers with the aggregate liquidity coverage ratio at 151.5 per cent in September (August 2023: 150.3 per cent).
“The banking system loan-to-fund ratio remained broadly stable at 82.5 per cent in September (August 2023: 82.3 per cent),” BNM noted.
On asset quality in the banking system, the central banks said it remained intact, with overall gross and net impaired loans ratios remaining broadly stable at 1.72 per cent (August 2023: 1.78 per cent) and 1.07 per cent (August 2023: 1.11 per cent) respectively in September.
“The loan loss coverage ratio (including regulatory reserves) continued to be at a prudent level of 117.5 per cent of impaired loans,” it added. “Total provisions to total loans ratio remained on a steady moderating trend, aided by loan growth and provision writeback following improvement in asset quality.”
— Bernama
