Bank Negara says Malaysia’s banking system remains healthy

The central bank maintains the overnight policy rate at 3% on sound economic fundamentals.

Bank Negara said the capitalisation of the banking system was sustained at a healthy level. The risk-weighted capital ratio and core capital ratio stood at 15.2% and 13.4% respectively as at end-December 2012.

It also noted that the level of net impairment declined further partly due to loan write-offs. The central bank added the level of impairment loans ratio was unchanged at 1.4% of net loans, while the loan loss coverage ratio remained above 100%.

On the other hand, Bank Negara said economic growth was driven by continued domestic consumption and investments. It sees an expansion of domestic demand fueled by private sector activity.

It also believes private consumption will be supported by income growth and stable employment while investment will be led by capital spending in the domestic-oriented sectors, the oil and gas industry and the ongoing implementation of infrastructure projects.

The central bank said domestic headline inflation averaged 1.6% in 2012 and expected it to be higher in 2013 but to remain modest.

It expected selected global food prices and domestic factors to push up cost and contribute to higher prices.

It said it would continue to carefully assess the global economic and financial developments and their implications on the overall outlook for inflation and growth of the Malaysian economy.