Malaysian banks' gross impaired loans up 6.4% in August

But GIL ratio is stable at 1.67%.

According to UOB Kay Hian, Malaysian banks' gross impaired loans (GIL) rose 6.4% yoy in Aug 17 (Jul 17: 5.6%). However, on a mom basis, GIL ratio was relatively stable at 1.67%. Major loan segments which saw GIL balance rising at a faster yoy pace than loans growth were non-residential property (+25.4% yoy vs loans growth: +3.6%) and personal loans (+9.9% yoy vs loans growth: 3.9%).

Here's more from UOB Kay Hian:

Recent industry data suggests a mixed bag of data points. In the recent 2Q17 results, loans growth and non-interest income remained weak with positive yoy NIM being one of the very few growth drivers.

Even then, we noted that NIMs for most banks are starting to reverse downwards on a qoq basis. LLC ratio continues to decline for most banks while provision trend has to normalise upwards especially with the upcoming implementation of MFRS9.

On a positive note, the healthy CET1 ratios for most banks (averaging 11%) will ensure that they should be able to absorb the capital impact of higher Day One MFRS9-fuelled provision in the balance sheet without having to top up capital buffers via additional equity capital.