KUALA LUMPUR (June 28): Malaysia’s gross loan growth remained steady in May as corporate bonds rose while business loans moderated, official data from the central bank showed on Friday.

Credit to the private non-financial sector expanded 5.4% year-on-year in May, the same pace as in April, Bank Negara Malaysia (BNM) said in a statement. Outstanding business loans grew 4.8% in May versus 5.6% in April amid slower working capital loan growth while corporate bonds growth picked up to 4% from 3.4% a month earlier.

Household loan growth increased to 6.3% from 6.2% driven mainly by loans for the purchase of housing and cars. “Loan applications and disbursements among household borrowers also continued to be forthcoming,” BNM said.

The data covers loans to households and non-financial corporations from the banking system and development financial institutions, as well as corporate bonds issued by non-financial corporations, including short-term papers.

“Asset quality in the banking system remained intact” as the industry’s gross impaired loans - debts deemed unrecoverable as a percentage of total loans - were stable at 1.6%. On a net basis, impaired loans were also stable at 1% in April.

Total provisions stood at RM32 billion, a tad lower from RM32.4 billion in the previous month.

“Banks’ liquidity and funding positions are strong to support intermediation,” BNM said, with an aggregate liquidity coverage ratio of 149.7% and loan-to-fund ratio at 82.2%.

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