Business

Thursday August 27, 2009

Gross financing up in July on high loan disbursement


PETALING JAYA: Demand for financing continued to improve as gross financing via the banking system and capital market rose to RM64.2bil in July from RM60.7bil in June due to higher loan disbursements.

According to Bank Negara’s monthly statistical bulletin, banking system loans and private debt securities (PDS) outstanding, on a net basis, rose at a higher combined annual rate of 8.3% as at end July versus 8% in June.

Key loan indicators including loan applications, approvals, disbursements and repayments were higher, especially for segments like residential and non-residential properties, passenger cars and credit cards.

Higher loan disbursements also led to further expansion of household loans outstanding by an annual rate of 9% in July (June: 9.1%).

Demand for financing by the business sector in July was driven by the manufacturing and wholesale, retail trade, restaurants and hotels sectors.

Notwithstanding the disbursements to the electricity, gas and water supply sectors in July, loans disbursements remained broad-based.

High loan disbursements led to higher business loans outstanding by RM3.3bil on a month-on-month basis. Annually, business loans outstanding grew 3.2% in July (end-June: 3.7%).

In the capital market, meanwhile, net funds raised amounted to RM10.5bil in July (June: RM12.3bil). The public sector raised RM9.5bil via the issuance of a five-year Government Investment Issues and the re-opening of a 10-year Malaysian Government Securities.

Gross funds raised by the private sector via issuances of PDS totalled RM3.2bil and after adjusting for redemptions, net funds raised in the PDS market amounted to RM1.5bil.

The bulk of issuances was by companies in finance, insurance, real estate, services, transport storage and communication sectors, and used as working capital.

The benchmark index FTSE Bursa Malaysia KL Composite Index remained on uptrend in July as sentiment improved, thanks to sustained rise in crude palm oil prices and investors’ optimism over the prospects for global economic recovery.

Market capitalisation amounted to RM885.8bil as at end July, while daily average turnover fell to 1,002 million units from 1,666 million in June.

As at Aug 25, overall market capitalisation rose to RM889bil while daily average turnover was at 982.7 million units.

The net international reserves of Bank Negara amounted to RM321.5bil as at end-July and rose to RM322.2bil as at Aug 14. The reserves position is sufficient to finance nine months of retained imports and is 3.8 times the short-term external debt.

As for the banking sector, the level of capitalisation is still sound, with the risk-weighted capital ratio and core capital ratio improving to 14.2% and 12.6% respectively.

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