Net financing up slightly in November, says BNM

Malaysia's central bank is likely to cut its benchmark rate to 3% at a policy review on Tuesday to cope with a slowdown in growth, a slim majority of analysts in a Reuters poll said.

KUALA LUMPUR: Net financing growth increased slightly to 7.3 per cent in November (October: 7.1 per cent) due mainly to higher growth in outstanding banking system loans of 6.2 per cent (October: 6.0 per cent), said Bank Negara Malaysia (BNM).

The central bank said business financing remained strong, with a higher outstanding loan growth of 6.3 per cent (October: 5.6 per cent), driven mainly by the wholesale and retail trade, restaurants and hotels; construction and manufacturing sectors.

“Growth in outstanding corporate bonds remained healthy at 10.5 per cent (October: 10.2 per cent) and household loans moderated slightly to 5.7 per cent (October: 5.9 per cent),” it said in a statement today.

The banking system asset quality remains sound as there was marginal improvement in banks' asset quality. However, net impaired loans ratio remained unchanged at 0.9 per cent.

Banks also continued to maintain sufficient buffers against potential credit losses with total provisions to total loans ratio sustained at 1.5 per cent.

Meanwhile, headline inflation declined to 0.2 per cent in November (October: 0.6 per cent) due mainly to transport inflation which reflected the base effect.

"Excluding the impact of changes in consumption tax, core inflation remained broadly stable at 1.6 per cent (October: 1.5 per cent),” it added.

Export growth accelerated to 17.7 per cent in October due to strong growth in manufactured and commodity exports.

“Going forward, export growth is expected to register more moderate growth in line with lower global trade activity and normalisation in re-exports,” said the central bank.

Meanwhile, domestic financial markets remained orderly amid continued portfolio outflows.

“In November, domestic financial markets continued to record non-resident portfolio outflows, due mainly to uncertainties surrounding external developments,” said the central bank.

BNM said the ringgit depreciated by 0.1 per cent amid non-resident portfolio outflows, driven mainly by risk-off investor sentiments due to concerns over escalating global trade tensions and expectations over future interest rate hikes in the United States.

The FBM Kuala Lumpur Composite Index declined 1.7 per cent due to non-resident outflows of RM0.7 billion, as investors remained cautious amid continued volatility in global equity markets and the decline in crude oil prices.

Meanwhile,  the five-year Malaysian government securities yield remained stable amid non-resident outflows of RM5.4 billion, increasing slightly by 7.3 basis points.

“The impact of outflows remained contained due to active buying by domestic institutional investors,” it added.- Bernama