IMF published its staff report and selected issues report in the context of the 2018 Article IV consultation with Malaysia. Directors agreed that financial sector risks appear contained, with sound bank profitability, liquidity, and low nonperforming loans (NPLs). However, they noted that vulnerabilities in the household mortgages and the property development sector require vigilance and risk mitigation.
The staff report reveals that the overall corporate sector NPLs are at a manageable 2.7%. Internal bank credit underwriting standards have been effective in curbing household NPLs, which declined slightly to reach 1.4% of gross loans to households. The authorities largely agreed with staff’s view on prevailing financial sector conditions. They stated that risks are being monitored closely via stress-testing and other analyses, which indicate that domestic financial stability remains preserved even under extreme scenarios, supported by well-capitalized financial institutions. The authorities assess that banks can manage the potential risks to the property market, given the small size and sound quality of direct exposures to the segments with acute oversupply. Additionally, the Directors welcomed the commitment of authorities to take further actions to address deficiencies in the AML/CFT framework in Malaysia.
The selected issues report offers an overview of the labor market in Malaysia, which has evolved and performed strongly in the last three decades. The report also examines implications of the debt limit for the conduct of fiscal policy.
Keywords: Asia Pacific, Malaysia, Banking, Article IV, NPLs, Stress Testing, IMF
EBA published a report analyzing the impact of the unwind mechanism of the liquidity coverage ratio (LCR) for a sample of European banks over a three-year period, from the end of 2016 to the first quarter of 2020.
In response to questions from a member of the European Parliament, the ECB President Christine Lagarde issued a letter clarifying the possibility of amending the AnaCredit Regulation and making targeted longer-term refinancing operations (TLTROs) dependent on the climate-related impact of bank loans.
IASB started the post-implementation review of the classification and measurement requirements in IFRS 9 on financial instruments and added the review as a project to its work plan.
FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions.
EBA published a report on the benchmarking of national loan enforcement frameworks across 27 EU member states, in response to the call for advice from EC.
FSB published a letter from its Chair Randal K. Quarles, along with two reports exploring various aspects of the market turmoil resulting from the COVID-19 event.
RBNZ launched a consultation on the details for implementing the final Capital Review decisions announced in December 2019.
The Trustees of the IFRS Foundation, which are responsible for the governance and oversight of IASB, have announced the appointment of Dr. Andreas Barckow as the IASB Chair, effective July 2021.
HKMA issued a letter to consult the banking industry on a full set of proposed draft amendments to the Banking (Capital) Rules for implementing the Basel standard on capital requirements for banks’ equity investments in funds in Hong Kong.
ESRB published an opinion assessing the decision of Swedish Financial Supervisory Authority (FSA) to extend the application period of a stricter measure for residential mortgage lending, in accordance with Article 458 of the Capital Requirements Regulation (CRR).