KUALA LUMPUR: The loss-absorbing capacity of banks in the country remains strong, with excess capital buffers of RM131.9 billion as of January 2022, Bank Negara Malaysia (BNM) said today.

       The central bank said banks remain well capitalised to withstand potential stress and continue to support credit flows to the economy.

       "Capital ratios rose slightly in January 2022 due to recognition of year-end profits. This was partially offset by valuation adjustments on available-for-sale financial instruments," it said in its monthly highlight report.

       According to BNM, the resilience of banks continued to be underpinned by sound asset quality, where overall gross and net impaired loans ratios remained broadly stable at 1.4 and 0.9 per cent, respectively.

       "Banks continue to set aside additional provisions against potential credit losses. Total provisions currently stand at 1.9 per cent of total banking system loans, and 130.5 per cent of impaired loans," it said.

       BNM said domestic financial market conditions tightened in January 2022 as Malaysian Government Securities (MGS) yields rose and the domestic equity market declined.

       This, the central bank said, was driven mainly by firmer expectations for a faster pace of US monetary policy tightening and the corresponding broad strengthening in the US dollar.

       "During the month, despite marginal ringgit depreciation, Malaysia continued to record non-resident portfolio inflows into the equities and bond market,” it continued. "Importantly, despite the weaker financial market performance, financial market adjustments remained orderly amid sufficient trading liquidity." - Bernama