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Year 2021 2nd Half Financial Stability Review

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Year 2021 2nd Half Financial Stability Review

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At 2nd half year 2021, the capitalization of the banks still maintain at high level with excess total capital of RM135.4 billion. These buffers provide banks with safeguard against the unexpected losses. With the improvement in the profitability in 2021, banks paid out higher dividend to the shareholders. Next, the increase of provisions has been more moderate because of the sizeable accumulation of provisions earlier in the pandemic. Moreover, the credit costs remained at 41 bps which is same with the first half of the 2021.

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Year 2020 2nd Half Financial Stability Review

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Year 2020 2nd Half Financial Stability Review

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Bank's liquidity maintain healthy positions as at second half of 2020 year. The aggregate banking system Liquidity Coverage Ratio at 148.2%. The results is supported by the resumption in loan repayment by the households and SME borrowers since October 2020. The impact of the pandemic on bank impairment levels is large in the second half oh year 2020. Gross impairment ratio of the banking system edged slightly higher from 1.4% to 1.6%. Due to the uncertainty of the economic recovery, the credit risk still remain challenging. The provisions grew until 40.6%. However, the profitability decline to 9.2% for return on equity and 1.1% for return on assets.

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Year 2021 1st Half Financial Stability Review

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Year 2021 1st Half Financial Stability Review

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Bank maintained to be resilient although there is a challenging credit risk. The gross impaired loans ratio remain at the low level which has 1.6% only. Banks has to increase provisions for credit losses as at first half of 2021 while the decrease in asset quality. The loan loss ratio increased at the high levels at 129.2%. Banks continued to protect to prevent the credit losses from loans. The annualized credit cost ratio decline to 41 point from 65 points.

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2020 year 1st Half Financial Stability Review

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2020 year 1st Half Financial Stability Review

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All banks remained well-capitalized throughout the first half of 2020 with excess total capital amounting to RM121.6 billion. The average cost of capital at 9% and is was 10.0% as at June 2020. Banks reported a decreasing in profitability during the first half of the year 2020. However, the banks maintained healthy capital buffers. The gross impaired loans ratio decrease in June 2020. Although the impairment remained low, but banks still cautions on the credit risk outlook.

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Banks continued to remain healthy capitalization, profitability and has improvement on the asset quality.
Banks maintain strong capitalization, the total capital ratio has 17.4% of risk weighted assets. The bank was largely supported by the income from financing activities, hence the profit continuedly record healthy. The return on assets at 1.4% while the return on equity at 12.6% at the year 2018. Bank asset quality remained sound, the net impaired loans ratio and the gross impaired loans ratio both decline but the loan loss coverage ratio increase. Moreover, the financial performance of overseas operations remained sound.

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Banks maintain high profitability and sound asset quality. There is strong capitalization and have a stable funding conditions to support the financing needs of the economy. The net interest increased slowly by 7.8%. The total capital ratio as at year 2017 is 17.1% while it is 16.5% at year 2016, the difference is 0.6%. Moreover, bank remains high quality capital, the investment bank increase greater compare to the Islamic banks and other domestic commercial banks.

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Year 2019 2nd Half Financial Stability Review

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Year 2019 2nd Half Financial Stability Review

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Bank Capitalization remain strong
All banks maintain capital ratios well, good profitability and sound asset quality. Bank maintain strong capitalization and the total capital ratio is 18.3%. In the 2nd half of 2019, the cost-to-income ratio maintain at 44.7%. This means that the profitability is maintained healthy. However, the asset quality is not so well. The gross impaired loans ratio decrease from 1.6% to 1.5%. There is some decrease in loan performance in specific segments of the household and business sector, but the potential losses remain. Banks continued to remain strong buffers against the potential credit losses. The total provisions by banks against credit losses stood at RM33.9 billion or 126.4% of impaired loans as at 2nd half of 2019. Moreover, the overseas operations remained profitable despite weaker economic conditions. The impairment ratio remained from 3.5% to 3.8% due to higher loan loss provisions amid the more moderate domestic growth performance with the impairment ratio rising to 4.1%.

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Year 2019 1st Half Financial Stability Review

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Year 2019 1st Half Financial Stability Review

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Bank Capitalization and Profitability remained strong
Bank maintained strong capitalization at 17.4% of risk-weighted assets. 77% of bank's capital remained high-quality loss-absorbing capital comprising paid up capital, retained earnings and reserves. Bank's profitability is healthy, the cost-to-income ratio increase until 44.6% at first half in year 2019. The resilience of bank's capital and profits was nevertheless supported by high asset quality. The gross impairment ratios increased slightly from 1.48% until 1.6%. Bank maintained strong protections against the possible upcoming losses. The minimum requirement of loan loss provisions is 1.00% while in the first half financial stability review in year 2019 the bank has 1.4% of total provision to total loans ratio. Most banks maintained resilient to the macroeconomics and financial shocks with sufficient capital and profit to absorb the potential upcoming losses. Moreover, the financial performance of overseas operations remained good, the total capital ratio increase until 19.1% and the gross impaired loans ratio increase until 2.3 %.

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Discussion on the soundness and resilient of the Financial Stability Review from year 2017 until 2021

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Discussion on the soundness and resilient of the Financial Stability Review from year 2017 until 2021