Outlook for M'sian banking sector remains stable, says Moody's
Published on: Friday, August 28, 2015
Kuala Lumpur: The outlook for the Malaysian banking sector remains stable as its exposure to foreign currency loans is minimal, said Moody's Investors Service.Its vice president-senior credit officer, financial institutions group, Eugene Tarzimanov said the banks' current position are quite strong as compared to what they were during the Asian financial crisis."The banks are as good as the economy and Malaysia still remains one of the fastest growing economy in the region despite the headwind woes such as currency exchange, slowing economy in China and lower commodity prices," he said at Moody's media roundtable session here, Thursday.
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The session was held to assess the impact of market volatility on Malaysian credit.Tarzimanov said the impact of the weaker ringgit against the US dollar on the local banks appeared to be very muted."There are strong linkages of the weaker ringgit to foreign currency loans and foreign currency funding."Both of those aspects are pretty small in Malaysia. We are talking about 10 per cent of loans in foreign currency and similar amount in foreign currency funding," he added.
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Tarzimanov noted that the 10 per cent loans in foreign currency mainly involved exporters. Asked on the challenges faced by the industry, he said profitability and slower growth dynamics would be the major concerns for the local banking institutions.
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