Malaysian banks' gross impaired loans ratio improved to 1.64%

Loan loss coverage was stable MoM at 83.2%.

Absolute gross impaired loans (GIL) rose 5.0% in June versus 7.1% YoY in May, but the overall GIL ratio improved to 1.64% from 1.67% in May, reported Maybank Kim Eng. 

"Residential property absolute GIL rose 9.6% YoY but the GIL ratio was just 1.12% end-June. Absolute GIL for personal loans rose 19.9% YoY but the GIL ratio improved to 2.19% from 2.22% end-May. Meanwhile, absolute auto GIL continued to contract and the GIL ratio continues to be low at 0.83%," the firm added.

What requires to be monitored still, according to Maybank Kim Eng, would be asset quality in the non-residential property space, whereby absolute GILs are rising at a double-digit pace (+24.6% YoY in June) and the GIL ratio has since risen to 1.19% from a low of 0.67% in May 2014. Working capital GILs rose a marginal 3.3% YoY but the ratio has normalized back to 2.41% from 2.46% in May 2017.