BNM: Local financial markets affected by global investor sentiments in October 2023

The central bank said global financial conditions were influenced mainly by the rise in the 10-year United States (US) Treasury yield as strong US economic data led to growing investor expectations of a higher policy rate environment.

"Against this backdrop, the 10-year Malaysian Government Securities yield increased by 14 basis points (bps) in October (regional average: up 22 bps) while the ringgit depreciated by 1.6 per cent against the US dollar (regional average: -0.3 per cent)," it said in its latest monthly financial and economic highlights.

Meanwhile, the FTSE Bursa Malaysia KLCI increased by 1.3 per cent amid improved domestic equity market sentiments post-Budget 2024, it added.

Banks remained well-capitalised to support economic growth, BNM said, noting that capital ratios were broadly stable, supportive of banks' financial intermediation activities and bolstering their ability to withstand unexpected losses.

The banking system's excess capital buffer remained healthy at RM132.6 billion in October, it said.

"The banking system continued to record healthy liquidity buffers with the aggregate liquidity coverage ratio at 150.8 per cent (September 2023: 151.5 per cent). The aggregate loan-to-fund ratio remained largely stable at 82.2 per cent (September 2023: 82.5 per cent)," the central bank said.

Credit to the private non-financial sector grew by 4.2 per cent as at end-October (September 2023: 4.2 per cent), underpinned by higher outstanding household loan growth amid slower growth in credit to businesses.

BNM said outstanding business loans expanded by 1.0 per cent in October (September 2023: 1.6 per cent), due mainly to more moderate growth in working capital loans among non-small and medium enterprises (non-SMEs).

"Growth in outstanding loans to SMEs, however, remained forthcoming at 6.9 per cent (September 2023: 6.7 per cent)," it said.

Growth in outstanding corporate bonds, meanwhile, was sustained at 5.0 per cent.

For households, it said, outstanding loan growth improved slightly to 5.6 per cent (September 2023: 5.4 per cent), supported by higher growth across most loan purposes.

"This reflected higher demand for household loans, particularly for the purchase of houses, cars and personal use," BNM said.