KUALA LUMPUR, June 30 — The banking system's liquidity position remained healthy in May, supporting financial intermediation, said Bank Negara Malaysia (BNM).
In its Monthly Highlights report for May, it said the banking system maintained robust liquidity buffers, with an aggregate liquidity coverage ratio of 150.4 per cent (April 2025: 156.1 per cent).
“The aggregate loan-to-fund ratio increased slightly to 83.6 per cent (April 2025: 83.3 per cent), driven by sustained loan growth,” BNM said.
It also noted that asset quality in the banking system remained intact.
“The gross impaired loans ratio rose marginally higher to 1.5 per cent in May (April 2025: 1.4 per cent), while the net impaired loans ratio remained stable at 0.9 per cent.
“The loan loss coverage ratio, including regulatory reserves, remained prudent at 128.9 per cent of gross impaired loans (April 2025: 131.1 per cent),” BNM said.
Credit growth to the private non-financial sector also remained sustained.
It added that credit to the private non-financial sector grew by 5.4 per cent in May, unchanged from April 2025, supported by higher growth in outstanding business loans (5.0 per cent; April 2025: 4.4 per cent), even as growth in outstanding corporate bonds moderated (4.7 per cent; April 2025: 5.5 per cent).
"Growth in business loans increased to 5.0 per cent (April 2025: 4.4 per cent), mainly due to higher working capital loan growth, particularly among the non-small and medium enterprises, while investment-related loan growth remained steady across segments.
"Household loan growth remained stable at 6.0 per cent (April 2025: 6.0 per cent), supported by sustained growth across most loan purposes," BNM said.
On domestic financial markets, developments continued to be mainly influenced by evolving United States (US) tariff policies.
“Global financial conditions eased in May following the US administration’s announcement of a 90-day truce. However, investors remained cautious due to lingering uncertainties surrounding tariffs and ongoing concerns over a potential global economic slowdown,” it said.
BNM also reported that both headline inflation and core inflation were lower in May.
“Headline inflation moderated to 1.2 per cent (April 2025: 1.4 per cent), while core inflation eased to 1.8 per cent (April 2025: 2.0 per cent),” it said.
The decline in headline inflation was primarily attributed to selected non-core items, like fresh vegetables and petrol, in line with lower commodity prices. Lower inflation for rental and streaming services mainly drove the moderation in core inflation.
On the production side, BNM noted stronger growth in the manufacturing sector.
“The manufacturing Industrial Production Index recorded strong growth of 5.6 per cent in April (March 2025: 4.0 per cent).
“Export-oriented clusters expanded by 6.4 per cent in April (March 2025: 4.8 per cent), supported by higher production of electrical and electronics, as well as consumer-related items such as vegetables, animal oils, and fats,” it said.
— Bernama
