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Private sector net financing up 11.5% [01-03-2011]  
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Net financing to the private sector in January increased by RM7.2bil or 11.5% annually versus RM17.4bil or 11.3% in December, driven mainly by increased loans outstanding while private debt securities (PDS) issuances moderated during the month.

Loans outstanding rose moderately by 22.2% during the month, said Bank Negara Malaysia (BNM) in a statement yesterday.

“The expansion in loans outstanding to businesses was largely due to higher loans extended to the manufacturing, wholesale and retail, restaurants and hotels; transport, storage and communication and finance sectors.

“Household loans outstanding continued its steady rise, driven mainly by loans for the purchase of residential properties; passenger cars and securities. Loan demand remained robust with higher loan applications, particularly from the household sector,” it said.

Year-on-year, banking system loans outstanding for households and businesses grew 13.4% and 10.1% respectively in January.

The central bank said the level of capitalisation of the banking system remained intact, although the risk-weighted capital ratio (RWCR) and core capital ratio (CCR) declined to 14.1% and 12.4% respectively.

“This was largely attributed to the distribution of retained earnings by a banking group,” it said.

The level of net impaired loans amounted to 2.2% of net loans, whilst the loan loss coverage was slightly above 90%.”

Interbank rates were stable in January. In terms of retail rates, the average base lending rate of commercial banks was unchanged at 6.27% as at end of the month.

Retail deposit rates were also stable. Broad money, meanwhile, expanded at a faster pace in January.

“The increase in broad money reflected higher foreign inflows and faster credit extension by the banking system to the private sector. Narrow money also increased significantly reflecting higher demand for currency in the lead up to the festive season,” said BNM.

Headline inflation was higher in January, increasing by 2.4% on an annual basis. This largely reflected the high commodity and energy prices in the global economy that was translated into higher food and fuel prices, said the central bank.

“As with other global and regional economies, inflation in Malaysia during the month was largely the result of price increases in the food and non-alcoholic beverages and transport categories.

“The increase in food prices was largely for both the food at home and food away from home sub-categories, reflecting the higher prices of vegetables and fruits.”

BNM added that higher transport prices reflected the increases in prices for retail fuel and engine oil, and the cost of car service and repairs during the month.

The central bank also said the Ringgit had, in January, appreciated against most of Malaysia’s major trade partners, except the euro.

“The positive growth outlook in Asia relative to the developed economies continued to support the regional currencies, as it lifted investor sentiments towards regional economies and financial markets.

“In February, the ringgit continued to strengthen against most currencies.”

The international reserves of BNM stood at RM338bil as at Feb 14, 2011, sufficient to finance 8.1 months of retained imports and is 4.3 times the short-term external debt, said the central bank.

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