The Malaysian Reserve, Photo Credit to The Malaysian Reserve
clock 16-03-2018
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BNM to Monitor Housing Glut Despite Sound Financial Report Property

Bank Negara Malaysia (BNM) will continue to monitor the glut in the property sector, particularly in the high-end high-rise residential property, office space and shopping complex segments.

BNM said in a statement that while the Financial Stability Committee (FSC) would remain vigilant on the sector, banks are also expected to remain cautious in lending to the segments.

As it is, BNM said the access to house financing, particularly for first-time buyers of affordable homes, is sustained with approval rates at 73%.

Meanwhile, the FSC, at its March 9 meeting, had also assessed that domestic financial stability would continue to be preserved and well-supported by sound financial institutions and orderly domestic financial markets. "Household financial assets were high, and grew faster than debt as at the end of December 2017.

"The debt servicing capacity of households remains intact amid low impairment levels, underpinned by stronger income and employment growth" the BNM statement read.

BNM said the committee has also agreed that the existing macro-prudential measures would remain appropriate in managing vulnerabilities from macro-financial linkages.

For Malaysian corporations, aggregate leverage had increased in tandem with investment activity, as debt-at- risk trended lower on sustained financial health and low impairment levels.

"The overall credit outlook for the business sector is expected to improve, given favourable economic conditions, although the oil and gas and property-related sectors still face some headwinds" BNM said.

Potential vulnerabilities from external borrowings of local companies are contained with exposures largely hedged and comprising intra-company borrowings with longer maturities.

The local banking, insurance and takaful sectors had remained resilient, supported by a high level of capitalisation, while domestic financial intermediation is expected to remain supportive of economic activity.

As at end-January 2018, the banking system's loan-to-fund ratio and liquidity coverage ratio stood at 84% and 132% respectively, according to BNM.

BNM said banks had continued to undertake measures to strengthen their defence against cyber threats and increase scrutiny on accounts potentially being used to facilitate illegal financial schemes.

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