ID :
17456
Sat, 08/30/2008 - 10:29
Auther :
Shortlink :
http://m.oananews.org//node/17456
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MONETARY POLICY RESPONSE TO CHANGES IN GROWTH AND INFLATION OUTLOOK
KUALA LUMPUR, Aug 29 (Bernama) -- An appropriate monetary policy response will be taken in the event the outlook for growth or inflation changes, the Finance Ministry said Friday.
"Current developments will be closely monitored," it said in the 2008/2009 Economic Report.
It noted that though the risks of slower growth and higher inflation have
become more pronounced, there was no change in the monetary policy stance in the
first seven months of the year.
Inflation surged to 7.7 percent in June and 8.5 percent in July, with an
average 4.4 percent in the first seven months of 2008, due to higher food and
fuel prices.
On monetary development, money supply and private sector financing expanded
strongly, with MI - narrow money - and M3 - broad money - increasing 17.8
percent and 14.2 percent, respectively, as at end of June, it said.
It said interest rates remained stable in an environment of ample liquidity
in the banking system during the same period.
With the overnight policy rate held steady at 3.5 percent since April 2006,
the average base lending rate of commercial banks remained at 6.72
percent.
It said gross private sector financing through the banking system and
capital market also expanded strongly by 18.6 percent to RM349.9 billion from
RM294.9 billion in the January-June period last year.
Against the backdrop of sustained domestic economic growth, all financing
indicators of the banking system expanded during the six months of 2008.
It said loan applications, approvals and disbursements posted double-digit
growth of 18.3 percent, 11.2 percent and 18 percent, respectively.
Total loans outstanding also grew at a stronger pace of 11.7 percent to
RM685.9 billion as at end of June 2008 from RM644.2 billion in the same period
last year, it said.
The report said Initiatives taken over the years helped increase the share
of small and medium enterprises (SMEs) financing to 43 percent as at end of June
2008 from 30 percent of total business loans of banking institutions in
1999.
Utilisation of credit cards remained high with transactions comprising
purchases and cash advances increasing 17 percent to RM30.8 billion from RM26.3
billion, it said.
As for ringgit performance from end of June to Aug 15, 2008, it was mixed
against major and regional currencies following further uncertainties over
global economic growth and volatility in financial markets.
During the period, the local unit depreciated two percent against the US
dollar but appreciated 4.7 percent and 4.8 percent against the pound sterling
and euro.
Against regional currencies, the ringgit softened in the range of 0.9
percent and 2.9 percent to the baht, peso, yuan, rupiah and won.
It however appreciated against the Singapore dollar and yen by 1.7 percent
and 1.8 percent, respectively.
As for development in the financial sector, the banking system remained
resilient and sound, supported by strong capitalisation, higher profitability
and improved quality of assets.
The level of capitalisation of banking institutions measured in terms of
the
risk-weighted capital ratio stood at 13 percent, significantly higher than the
Basel minimum requirement of eight percent, it said.
The quality of the loans portfolio continued to improve with the net
non-performing loans (NPLs) reaching a 10-year record low during the first six
months of 2008.
The NPLs based on three-month classification fell RM4.9 billion to RM36.9
billion as at end of June 2008 from RM41.8 billion as at end of last
year.
Consequently, the net NPLs ratio improved further to 2.7 percent from 3.2
percent as at end of last year.
On investment banks, the ministry said only two merchant banks and one
universal broker have yet to transform into investment banks as at July
2008.
It said implementation of the investment bank framework had achieved
commendable results since its introduction in 2005, with 13 investment banks
already in operations.
As a progress of the Financial Sector Master Plan launched in March 2001,
several initiatives were taken in the first six months of this year.
During the period, Bank Negara approved seven applications to commence
negotiations for mergers and acquisitions.
Approval was also granted to a financial institution from the United Arab
Emirates to acquire equity stake in a domestic banking group.
-- BERNAMA
"Current developments will be closely monitored," it said in the 2008/2009 Economic Report.
It noted that though the risks of slower growth and higher inflation have
become more pronounced, there was no change in the monetary policy stance in the
first seven months of the year.
Inflation surged to 7.7 percent in June and 8.5 percent in July, with an
average 4.4 percent in the first seven months of 2008, due to higher food and
fuel prices.
On monetary development, money supply and private sector financing expanded
strongly, with MI - narrow money - and M3 - broad money - increasing 17.8
percent and 14.2 percent, respectively, as at end of June, it said.
It said interest rates remained stable in an environment of ample liquidity
in the banking system during the same period.
With the overnight policy rate held steady at 3.5 percent since April 2006,
the average base lending rate of commercial banks remained at 6.72
percent.
It said gross private sector financing through the banking system and
capital market also expanded strongly by 18.6 percent to RM349.9 billion from
RM294.9 billion in the January-June period last year.
Against the backdrop of sustained domestic economic growth, all financing
indicators of the banking system expanded during the six months of 2008.
It said loan applications, approvals and disbursements posted double-digit
growth of 18.3 percent, 11.2 percent and 18 percent, respectively.
Total loans outstanding also grew at a stronger pace of 11.7 percent to
RM685.9 billion as at end of June 2008 from RM644.2 billion in the same period
last year, it said.
The report said Initiatives taken over the years helped increase the share
of small and medium enterprises (SMEs) financing to 43 percent as at end of June
2008 from 30 percent of total business loans of banking institutions in
1999.
Utilisation of credit cards remained high with transactions comprising
purchases and cash advances increasing 17 percent to RM30.8 billion from RM26.3
billion, it said.
As for ringgit performance from end of June to Aug 15, 2008, it was mixed
against major and regional currencies following further uncertainties over
global economic growth and volatility in financial markets.
During the period, the local unit depreciated two percent against the US
dollar but appreciated 4.7 percent and 4.8 percent against the pound sterling
and euro.
Against regional currencies, the ringgit softened in the range of 0.9
percent and 2.9 percent to the baht, peso, yuan, rupiah and won.
It however appreciated against the Singapore dollar and yen by 1.7 percent
and 1.8 percent, respectively.
As for development in the financial sector, the banking system remained
resilient and sound, supported by strong capitalisation, higher profitability
and improved quality of assets.
The level of capitalisation of banking institutions measured in terms of
the
risk-weighted capital ratio stood at 13 percent, significantly higher than the
Basel minimum requirement of eight percent, it said.
The quality of the loans portfolio continued to improve with the net
non-performing loans (NPLs) reaching a 10-year record low during the first six
months of 2008.
The NPLs based on three-month classification fell RM4.9 billion to RM36.9
billion as at end of June 2008 from RM41.8 billion as at end of last
year.
Consequently, the net NPLs ratio improved further to 2.7 percent from 3.2
percent as at end of last year.
On investment banks, the ministry said only two merchant banks and one
universal broker have yet to transform into investment banks as at July
2008.
It said implementation of the investment bank framework had achieved
commendable results since its introduction in 2005, with 13 investment banks
already in operations.
As a progress of the Financial Sector Master Plan launched in March 2001,
several initiatives were taken in the first six months of this year.
During the period, Bank Negara approved seven applications to commence
negotiations for mergers and acquisitions.
Approval was also granted to a financial institution from the United Arab
Emirates to acquire equity stake in a domestic banking group.
-- BERNAMA
