According to Bank Negara Malaysia, Malaysia's banking system is still adequately capitalised to enable economic recovery.
According to the central bank, the little increase in capital ratios in May 2022 was caused by price increases on financial instruments that were readily available for purchase at the time as bond yields briefly decreased.
"According to BNM's monthly highlights for May 2022 report, the banking system had RM121.5 billion in excess capital buffers as of the end of May 2022.
Following the tapering of repayment assistance measures starting in the first quarter of 2022, the central bank reported that overall gross and net impaired loans ratios remained largely stable at 1.6% and 1%, respectively, reflecting a slight increase in impairments from the business and household segments.
"Total provisions remained at sensible level, accounting for 109.1% of bad loans and 1.8% of all loans in the banking sector.
According to the statement, "Total provisions and regulatory reserves as of end-May 2022 stood at RM 40.7 billion (end-April: RM 40.2 billion)."
Following the decline in the 10-year Malaysian Government Securities (MGS) yield of 21.0 basis points (bps) during the month, supported by foreign portfolio inflows into the domestic bond market, BNM stated that market adjustments on the domestic financial market remained orderly.