Malaysian banks saw credit growth ease in December as business borrowing demand weakened.
Loans to the private non-financial sector expanded by 5.3% during the month, down from 5.5% in November. The slowdown was mainly driven by softer corporate lending, which rose 3.7% in December compared with 5% growth a month earlier, according to Bank Negara Malaysia (BNM) data.
BNM said in its 30 January 2026 report that asset quality and loan impairment indicators remained steady in December 2025.
The banking system’s liquidity coverage ratio stood at 154.8% in December, improving from 145.6% in November 2025.
The gross impaired loan ratio held steady at 1.4%, whilst the net impaired loan ratio declined slightly to 0.9% from 1% in the previous month.
Meanwhile, outstanding corporate bonds rose 6.9% in December, up from 5.5% in November.
CGS International had earlier projected that Malaysian banks’ lending expansion would moderate in the final two months of 2025.
In a separate report, S&P Global Ratings expects credit demand to remain subdued, resulting in slower loan growth over the next two years, though banks are likely to maintain solid profitability.
“We anticipate weaker credit demand, leading to loan growth of around 4% to 5% over the next two years,” said S&P Global Ratings credit analyst Nikita Anand in a late-2025 report.
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