Private sector loans in Malaysia, excluding those to financial institutions, increased by 5.4% in May 2025. This growth was primarily driven by a 5% rise in business loans, an acceleration from April’s 4.4% increase. The uptick in business loans was largely attributed to higher demand for working capital, particularly from non-SME businesses.
Key Financial Indicators
While business loans saw an upswing, the growth in outstanding corporate bonds slowed to 4.7% in May, down from 5.5% in April.
Malaysia’s banking system maintained strong liquidity, with an aggregate liquidity coverage ratio of 150.4% in May. The loan-to-fund ratio stood at 83.6%, reflecting sustained loan expansion.
Despite the overall growth, the gross impaired loans ratio slightly increased to 1.5% in May from 1.4% in April. However, the banking system remains well-protected, with a loan loss coverage ratio of 128.9% of gross impaired loans, including regulatory reserves.
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