Malaysia bank loans up 5.7% in May on record business loan growth

Utility loans grew 38.1%, whilst household loans sustained its 5.5% growth rate.

Malaysia’s banking system logged a 5.7% year-on-year (YoY) loan growth in May 2026, lifted by record-high business loan growth, but gross impaired loans (GIL) also rose.

This marks the fourth consecutive month of loan growth, according to CGS International (CGSI),

Business loan growth hit 7% YoY at end-May 2026, driven by a 38.1% growth in utility loans.

Household loan growth was sustained at 5.5% YoY in May, the same as in April, said CGSI.

The banking industry’s GIL rose by MYR843.3m or 2.5% month-on-month in May. CGSI attributed the higher GIL mainly from residential mortgages and working capital loans.

The higher GIL also reflected negative impact from elevated oil prices, which in turn would have lifted the operating costs for some companies, CGSI said.

A $1.3b support package from Bank Negara Malaysia should help prevent a spike in bad loans related to the Middle East war, S&P said in a separate report.

Malaysian banks’ management overlay of MYR4.29b should provide a buffer for the higher GIL, according to CGSI.

CGSI earlier set expectations for Malaysian banks' GILs to rise throughout 2026.

Banks should have enough buffers to withstand non-performing loan (NPL) shocks, according to stress tests by S&P.