KUALA LUMPUR, 30 Dec 2022 – Bank Negara Malaysia (BNM) said headline inflation continued to remain stable at four per cent in November (October: 4.0 per cent) as the increase in core inflation was offset by lower inflation in other categories, namely fuel and fresh food.
In a statement today, BNM said that core inflation increased slightly to 4.2 per cent (October: 4.1 per cent) due mainly to the increase in prices for food away from home.
The central bank also said that the manufacturing Industrial Production Index expanded in October 2022 by 4.2 per cent.
“Growth was driven mainly by the electrical and electronic (E&E) cluster which recorded above-average growth at 8.7 per cent (2016-2019 avg.: 6.2 per cent),” BNM said.
According to BNM, the primary cluster, particularly refined petroleum products production, also supported growth with the resumption of operations at an existing oil refinery that was previously under maintenance.
Meanwhile, net financing grew by 4.7 per cent as of end-November (October: 5.7 per cent), reflecting lower growth in both outstanding loans (5.5 per cent; October: 6.5 per cent) and corporate bonds (2.6 per cent; October: 3.6 per cent).
Household loan growth moderated to six per cent (October: 6.3 per cent) as loan repayments growth outpaced that of disbursements across major loan purposes.
Outstanding business loan growth moderated to 3.4 per cent (October: 5.2 per cent), due mainly to strong growth in repayments among large firms.
Loan disbursements continued to record double-digit growth (November 13.7 per cent; October: 13.4 per cent), despite some moderation in growth in the consumer manufacturing and real estate sectors.
BNM also stated that Global financial conditions eased following expectations for a slower pace of monetary policy tightening as inflation continued to show signs of peaking, especially in the US.
The easing of COVID-19 restrictions in China also supported the overall investors’ risk sentiment, it said.
“Consequently, domestic financial conditions eased, with the 10-year MGS (Malaysia Government bonds) yields declining by 26 bps (regional average*: -44.4 bps) and the FBM KLCI rising by 1.9% (regional average*: +5.2%). Financial markets’ performance was also supported by improved political certainty following the formation of the new Government.
The ringgit appreciated by 6.3 per cent against the US dollar, in line with a broad-based appreciation in major and regional* (average: +4.5 per cent) currencies against the US dollar,” BNM said.
The central bank said the banking system’s liquidity coverage ratio remained healthy.
“Banks are proactive in managing their buffers to address the year-end seasonal fluctuations in banking system liquidity and continue to be supportive of intermediation. The aggregate loan-to-fund ratio remained largely stable at 82.3 per cent (Oct-22: 82 per cent),” BNM said.
The central bank also said that overall gross and net impaired loans ratios remained unchanged at 1.8 per cent (Oct-22: 1.8 per cent) and 1.1 per cent (Oct-22: 1.1 per cent), respectively.
“Loan loss coverage ratio (including regulatory reserves) continues to record a prudent level of 116.5 per cent of impaired loans, with total provisions accounting for 1.8 per cent of total loans,” it added.
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