KUALA LUMPUR (July 31): Malaysia’s gross loan growth remained steady in June as expansion in business borrowings offset a slowdown in consumer lending and corporate bonds, official data from the central bank showed on Wednesday.

Credit to the private non-financial sector expanded 5.4% year-on-year in June, the same pace as in May, Bank Negara Malaysia (BNM) said in a statement. Outstanding business loans grew 5.6% in June versus 4.8% in May.

The growth was supported by working capital and investment-related loans. By sector, the higher loan growth was observed across the construction and services sectors, BNM noted.

Outstanding household loan growth was a tad lower at 6.2% versus May’s rate of 6.3%.

Outstanding corporate bonds also grew at a more moderate pace of 3.4% compared to May’s pace of 4%.

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 sound,” BNM said, 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 June.

Total provisions stood at RM32 billion as of June, unchanged from the end of May.

“Banks' liquidity and funding positions remained supportive of intermediation activity,” with aggregate liquidity coverage ratio rising to 155.2% from 149.7% in May while the loan-to-fund ratio was slightly higher at 83% compared to 82.2% in May, BNM added.

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