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Banking system records MYR129.6B excess capital buffers

KUALA LUMPUR (BERNAMA) – The banking system recorded MYR129.6 billion excess capital buffers as at end-July 2022, said Bank Negara Malaysia (BNM).

Capital buffers refer to the total capital above the regulatory minimum which includes the capital conservation buffer of 2.5 per cent and bank-specific higher minimum requirements.

In its July 2022 monthly highlights report released yesterday, the central bank said banks remain well-capitalised to support economic recovery.

“Banks’ capital position remained strong to withstand potential stress and continue supporting credit flows to the economy.

“Banking system capital ratios improved in July, driven by half-yearly profit recognition and valuation gains on available-for-sale financial instruments as bond yields reversed marginally,” it said.

The banking system recorded RM41.1 billion of total provisions and regulatory reserves as of end-July 2022. PHOTO: BERNAMA

BNM said sound asset quality underpinned bank resilience even as overall gross and net impaired loans ratio rose slightly to 1.85 per cent (June-2022: 1.78 per cent) and 1.2 per cent (June 22: 1.1 per cent).

BNM said loan loss coverage ratio, including regulatory reserves, remains at a prudent level of 112.8 per cent of impaired loans, with total provisions accounting for 1.8 per cent of total loans.

The banking system recorded MYR41.1 billion of total provisions and regulatory reserves as of end-July 2022, it said.

On the headline inflation at 4.4 per cent in July versus June’s 3.4 per cent, BNM said this was “anticipated”, and was largely reflected in the base effect from the discount on electricity tariffs implemented in the third quarter of 2021 (Q3 CY2021) which contributed 0.5 ppt to headline inflation.

“Food and non-alcoholic beverages also contributed to higher inflation, increasing by 6.9 per cent during the month.

“Core inflation also increased to 3.4 per cent in July against June’s 3.0 per cent.

“The increase largely reflected higher prices for discretionary services, such as food away from home (7.8 per cent), due to improving demand amid the high-cost environment,” it said.

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