The headquarter of Central Bank of Malaysia. (Photo: themalaysianreserve.com)Kuala Lumpur (VNA) - Fitch Solutions Country Risk andIndustry Research (Fitch Solutions) has forecast that credit growth in Malaysiawill ease slightly to 4.3% this year from 4.5% in 2022 due to a weakereconomic outlook and higher borrowing costs.
Malaysian banks will likely remain on a stable footing despitepotential negative spillovers from banking stresses in the US andEurope, as a result of robust liquidity and capital buffers, as well as a muchless restrictive monetary environment, Fitch Solutions said in the latest researchreport.
Asset quality has alsoremained fairly stable despite the phasing out of support measures, and asignificant deterioration would not be expected in the months ahead, it added.
The rate-hiking cycle in the Southeast Asian country has alsobeen much more gradual and modest than in other parts of the world as inflationhas been more subdued, and interest rates were expected to peak soon.
Fitch Solutions noted that Malaysian banks were alsowell-capitalised with the aggregate banking system capital ratio coming in at18.5% in February, compared with an average of 18.3% in 2022.
This is significantly higher than the regulatory minimum of 10.5% (8% total capital ratio and a 2.5% capital conservation buffer),resulting in an excess capital buffer of 135 billion RM (30.5 billion USD).
According to the report, common equity tier 1 (CET1) and tier 1capital ratios also stood at 14.8% and 15.3% respectively, in the month, versus the Basel III requirement of 4.5% and6.0%.
Fitch Solutions said the banking system’s strong liquiditycoverage and loan-to-deposit ratios will continue to underpin financialstability in the country.
The latest data showed that the liquidity coverage ratio rose to152.7% in November 2022, from 147.1% in January 2022, which was much higherthan the minimum requirement of 100%, implying a higher margin of safety, itsaid./.
