BNM: Malaysia’s banking system capitalisation remains strong

KUALA LUMPUR (April 30): Malaysia’s financial institutions are well-positioned to withstand “severe macroeconomic and financial shocks”, with excess capital buffers of RM154 billion as at March 2019, said Bank Negara Malaysia (BNM).

In its monthly highlight statement today, BNM said Malaysia’s banking system capitalisation remained strong with such capital buffers.

The central bank said the increase in common equity tier one (CET-1) capital in the first quarter of 2019 was mainly attributable to an increase in retained earnings as several banks recognised profits for the financial year 2018.

Meanwhile, BNM said the ringgit depreciated by 0.3% against the US dollar, in line with most regional currencies (between -0.5% and -1.7%) in the month of March.

BNM said the weakening ringgit was driven mainly by non-resident outflows from the equity market as investor sentiments were subdued following concerns over the global growth and geopolitical outlook, as well as domestic factors. Consequently, the FBM KLCI declined by 3.8%.

“The 10-year MGS yield declined by 13 basis points, driven by continued non-resident inflows of RM2.7 billion into the Government bond market. This was in line with the downward trend in global sovereign bond yields amid easier global financial conditions,” it added.

The central also said headline inflation turned positive in March, mainly due to the higher global oil price, which led to higher domestic fuel prices.

This followed the drop in consumer price index (CPI) for the month of January and February, which fell 0.7% and 0.4% year-on-year (y-o-y) respectively.

Excluding the impact of the changes in the consumption tax policy, core inflation was unchanged at 1.6%, BNM added.

Source : TheEdgeMarkets