Malaysian banks' foreign currency deposits contract 4.5% for the first time in September

Say goodbye to rapid double-digit increases seen since March 2014.

Maybank Kim Eng notes that after having expanded at a rapid double-digit pace since Mar 2014, growth of Malaysian banks' foreign currency deposits tapered off to below 10% in Aug 2016 (+3.6% YoY) and contracted for the very first time (-4.5% YoY) in Sep 2016. "Whether this is a trend needs to be monitored, especially since the MYR has started weakening again," the brokerage firm says.

It adds that Malaysian banks' system deposits rose a marginal 1.3% YoY, which was just slightly faster than the growth of 1.0% YoY in August. On an annualized basis, deposits rose 0.4% versus a contraction of 1.4% the month before. CASA contracted 0.3% YoY in September versus a growth of 0.8% YoY in August.