The banking sector remained strong in the fourth quarter of 2008, with healthy capital levels and adequate liquidity reserves allowing banks to withstand economic challenges. Non-performing loans continued to decline, representing only 2.2% of total loans. Banks reported higher pre-tax profits compared to the previous quarter due to improved treasury and interest income performance, maintaining average returns on assets and equity.
The banking sector remained strong in the fourth quarter of 2008, with healthy capital levels and adequate liquidity reserves allowing banks to withstand economic challenges. Non-performing loans continued to decline, representing only 2.2% of total loans. Banks reported higher pre-tax profits compared to the previous quarter due to improved treasury and interest income performance, maintaining average returns on assets and equity.
The banking sector remained strong in the fourth quarter of 2008, with healthy capital levels and adequate liquidity reserves allowing banks to withstand economic challenges. Non-performing loans continued to decline, representing only 2.2% of total loans. Banks reported higher pre-tax profits compared to the previous quarter due to improved treasury and interest income performance, maintaining average returns on assets and equity.
The banking sector remained strong in the fourth quarter of 2008, with healthy capital levels and adequate liquidity reserves allowing banks to withstand economic challenges. Non-performing loans continued to decline, representing only 2.2% of total loans. Banks reported higher pre-tax profits compared to the previous quarter due to improved treasury and interest income performance, maintaining average returns on assets and equity.
key financial soundness indicators at healthy Banking System: Non-performing Loans levels. With a sound financial position and RM billion % net loans ample liquidity, the banking system remains 50 12 10 well-positioned to weather the challenging 40 8 30 environment envisaged in 2009, whilst 3-month 6 20 continuing its intermediation role effectively to 10 4 Dec-08: 2.2% 2 support the financial needs of the economy. 0 0 Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec 2004 2005 2006 2007 2008 Capitalisation level remained high Net NPL Net NPL ratio (RHS) Source: Bank Negara Malaysia
As at end-December 2008, the banking
system’s risk-weighted capital ratio (RWCR) and core capital ratio (CCR) was at 12.7% and Level of non-performing loans 10.6% respectively. Capital base moderated continued to decline marginally by 0.3%, mainly on account of higher investments in subsidiary companies. Sistem The qualityperbankan: Pinjaman of banking tidak system berbayar loan portfolio Nevertheless, excess capital above the recorded RM bilion further improvement during the % pinjaman bersih minimum 8% requirement remained high at quarter. Net NPLs declined by 5.0% to 50 12
RM38.8 billion at end-2008. RM15.8 billion (3Q 08: RM16.6 billion) to 10
40 8 account 30 for 2.2% of3 bulan total net loans as at 6 20 end-2008 (3Q 08: 2.4%). 4 10 2 Banking System: Capital Position Dis-08: 2.2% 0 0 2007 2008 Dis Mac Jun Sep Dis Mac Jun Sep Dis Mac Jun Sep Dis Mac Jun Sep Dis 2004 2005 2006 2007 2008 4Q 1Q 2Q 3Q 4Q NPL bersih Nisbah NPL bersih (sekala kanan) Capital Sumber: Bank Negara Malaysia CCR (%) 10.2 10.4 10.8 10.6 10.6 RWCR (%) 13.2 13.3 13.6 13.0 12.7
Source: Bank Negara Malaysia
Profitability remained high amidst
challenging environment
The banking system recorded a pre-tax profit
(PBT) of RM5.1 billion (3Q 08: RM 4.0 billion) during the quarter supported by better performance of treasury-related activities and improved interest income from intermediation activity. The annualised average returns on assets and equity remained stable at 1.5% (3Q 08: 1.5%) and 18.6% (3Q 08: 18.7%) respectively.