Malaysia’s government debt to gross domestic product ratio of 51 per cent is “quite high” compared with other countries with an “A” sovereign credit rating, Moody’s Investors Service said.
But the saving grace was that the debt was largely denominated in ringgit, mitigating external risks to the Southeast Asian nation.
“Just to put things into perspective, Malaysia’s government debt-to-GDP is about 51 per cent and the median for A-rated sovereigns is 41 per cent,” Moody’s sovereign risk analyst Anushka Shah said.
“When you look at the debt profile, we find that almost all the debt – about 97 per cent – is funded in the local currency and that acts as a mitigating factor in the event there is a currency or interest rate shock,” she told a media briefing .
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Moody’s Investors Service says its six rated Malaysian banks showed solid performance in 2017, with additional improvements likely in some areas in 2018.
Moody’s Vice President and Senior Analyst, Simon Chen, said the asset quality and profitability of the six banks generally improved in 2017, while capitalisation and funding remained accommodative.
“We expect loan demand to recover further in 2018, strengthening profitability, but also tightening funding conditions.
“As a result, profit growth among banks with weaker deposit franchises could be limited by higher funding costs,” he said in a statement today on its report titled, “Banks — Malaysia: 2017 Sees Asset Quality Stabilise, Profits Improve”.
Continue reading “Malaysian banking sector to continue showing growth in 2018, says Moody’s”