Excess capital buffer of RM133.3 billion
The banking system in Malaysia has recorded a healthy excess capital buffer of RM133.3 billion as of June 2021, according to Bank Negara Malaysia (BNM). This amount is equivalent to 3.6 times the minimum regulatory requirement, and reflects the strong capital position of the banking sector amid the Covid-19 pandemic.
BNM Governor Datuk Nor Shamsiah Mohd Yunus said the banking system’s capital adequacy ratio (CAR) stood at 18.4% as of June 2021, well above the minimum requirement of 8%. She added that the banking system also maintained sufficient liquidity buffers, with a liquidity coverage ratio (LCR) of 155.4% and a net stable funding ratio (NSFR) of 119.9%.
“The banking system remains resilient and continues to support the economy through this challenging period,” she said in a virtual press conference on Thursday.
Loan moratorium and repayment assistance
Nor Shamsiah also said that the loan moratorium and repayment assistance offered by banks have helped to ease the cash flow pressures faced by borrowers affected by the pandemic. She said that as of August 31, 2021, banks have approved applications for repayment assistance from 2.1 million individuals and 69,000 small and medium enterprises (SMEs), involving a total loan value of RM236.8 billion.
She added that banks have also extended targeted repayment assistance to borrowers who have lost their jobs or suffered income reductions due to the pandemic. As of August 31, 2021, banks have approved applications from 340,000 individuals and 14,000 SMEs for this assistance, involving a total loan value of RM24.6 billion.
Nor Shamsiah said that borrowers who are still facing difficulties in servicing their loans can contact their banks to discuss suitable repayment plans. She assured that banks are committed to providing assistance to eligible borrowers in a fair and transparent manner.
Economic outlook and policy stance
Nor Shamsiah also commented on the economic outlook and policy stance of BNM. She said that the Malaysian economy is expected to recover gradually in the second half of 2021, supported by the easing of lockdown measures, the acceleration of vaccination programme, and the continued resilience of exports.
She said that BNM expects the gross domestic product (GDP) growth for 2021 to be within the lower end of its earlier forecast range of 6% to 7.5%. She added that the downside risks to growth include the uncertainty over the pandemic situation, the pace of recovery in domestic demand, and the potential spillovers from external developments.
On the monetary policy front, Nor Shamsiah said that BNM has maintained its overnight policy rate (OPR) at 1.75% since July 2020, as it considers the stance to be appropriate and accommodative. She said that BNM will continue to monitor the economic and financial developments and assess their implications on the outlook and inflation.
She said that BNM expects headline inflation to average higher in 2021, mainly due to the low base effect from fuel prices in 2020. However, she said that underlying inflation is expected to remain subdued amid continued spare capacity in the economy.
“BNM will continue to ensure that its monetary policy stance is consistent with its price stability objective, while remaining supportive of the economic recovery,” she said.
