KUALA LUMPUR: Headline inflation continues to remain stable at 4.0 per cent in November 2022, similar to October 2022, as the increase in core inflation was offset by lower inflation in other categories, namely fuel and fresh food, said Bank Negara Malaysia (BNM).

The central bank said core inflation increased slightly to 4.2 per cent during the month from 4.1 per cent recorded in October, mainly due to the increase in prices for food away from home.

The manufacturing Industrial Production Index expanded in October 2022 by 4.2 per cent, with growth driven mainly by the electrical and electronic cluster which recorded above-average growth at 8.7 per cent.

“The primary cluster, particularly refined petroleum products production, also supported the growth with the resumption of operations at an existing oil refinery that was previously under maintenance,” the central bank said in a statement today.

Meanwhile, BNM said net financing moderated as repayments outpaced disbursements, with net financing growing by 4.7 per cent as of end-November (October: 5.7 per cent), reflecting lower growth in both outstanding loans (November: 5.5 per cent; October: 6.5 per cent) and corporate bonds (November: 2.6 per cent; October: 3.6 per cent).

Household loan growth moderated to 6.0 per cent (October: 6.3 per cent) as loan repayments growth outpaced that of disbursements across major loan purposes.

Outstanding business loan growth moderated to 3.4 per cent (October: 5.2 per cent), mainly due to strong growth in repayments among large firms.

Loan disbursements continued to record double-digit growth (November: 13.7 per cent; October: 13.4 per cent), despite some moderation in growth in the consumer manufacturing and real estate sectors.

The central bank highlighted that domestic financial conditions had eased amid improved investor sentiment, while global financial conditions had also eased following expectations of a slower pace of monetary policy tightening as inflation continued to show signs of peaking, especially in the United States.

“Easing of COVID-19 restrictions in China also supported the overall investors’ risk sentiment.

“Consequently, domestic financial conditions eased, with the 10-year Malaysian Government bonds yields declining by 26 basis points (regional average: -44.4 bps) and the FBM KLCI rising by 1.9 per cent (regional average: +5.2 per cent),” it said.

It noted that Malaysia’s financial markets’ performance was also supported by improved political certainty following the formation of the new government.

As for the ringgit, the central bank said the local note appreciated by 6.3 per cent against the US dollar, in line with a broad-based appreciation in major and regional currencies against the US dollar.

“The banking system’s Liquidity Coverage Ratio remained healthy, and the banks are proactive in managing their buffers to address the year-end seasonal fluctuations in banking system liquidity and continue to be supportive of intermediation,” it added.

The central bank noted that the aggregate loan-to-fund ratio remained largely stable at 82.3 per cent (October 22: 82.0 per cent).

BNM asserted that asset quality in the banking system remained intact and the overall gross and net impaired loans ratios remained unchanged at 1.8 per cent and 1.1 per cent, respectively.

“Loan loss coverage ratio (including regulatory reserves) continues to record a prudent level of 116.5 per cent of impaired loans, with total provisions accounting for 1.8 per cent of total loans,” it added.