Monthly Highlights

December 2023
Headline inflation remained unchanged at 1.5% in December
Contribution to Inflation • Headline inflation remained unchanged at
ppt. contribution %, yoy 1.5% in December (November 2023:
4.0 4.0
1.5%), while core inflation edged lower to
2.0 1.9 1.9% (November 2023: 2.0%).
2.0 2.0
1.5 1.5
0.0 0.0 • In particular, the moderation in core
inflation was due to lower inflation for food
Mar-23
Jan-23
Feb-23

Jun-23
Jul-23
Oct-22
Nov-22
Dec-22

May-23

Oct-23
Nov-23
Dec-23
Aug-22
Sep-22

Apr-23

Aug-23
Sep-23
away from home at 3.4% (November
Food & non-alcoholic beverages (29.5%) Housing & utilities (23.8%) 2023: 3.9%).
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)

1 Core inflation is computed by excluding price-volatile and price-administered items.

Source: Department of Statistics, Malaysia & Bank Negara Malaysia estimates

Slightly higher wholesale and retail trade growth in November

Index of Wholesale and Retail Trade

• The Index of Wholesale and Retail Trade
Ppt, % yoy (IOWRT) increased by 4.7% in November
20 2023 (October 2023: 4.5%).
Motor vehicles Retail Wholesale
• The expansion was driven by wholesale
10 trade in other specialised wholesale
4.5 4.5 4.7 components followed by retail trade in
other household equipment in specialised
0 stores.
Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov-
22 22 23 23 23 23 23 23 23 23 23 23 23 • However, sales of motor vehicles
moderated during the month.
Source: Department of Statistics, Malaysia

Sustained growth in credit to the private non-financial sector

• Credit to the private non-financial sector grew
Credit to the Private Non-Financial Sector1,2
by 4.7% as at end-December (November
Contribution to growth (ppt) Annual growth (%) 2023: 4.6%), driven mainly by higher growth
7 Business loans
Corporate Bonds
Household loans in credit to businesses (3.8%; November
Business Loans 6
5.6 2023: 3.5%).
Household Loans 5
Credit to the Private Non- 4 4.2
• Outstanding business loan growth increased
Financial Sector 3.6 to 3.6% (November 2023: 2.7%), driven
4.6 4.7 3
4.3 4.2
mainly by higher growth in working capital
0.9 2
1.1 1.1
1.0
0.8 1.0 loans. Of note, SME loan growth continued to
0.5 0.3
1 improve (8.2%; November 2023: 7.9%).
2.7 2.8 2.8 2.8
0 Outstanding corporate bonds growth,
Dec-22 Apr-23 Aug-23 Dec-23
Sep-23 Oct-23 Nov-23 Dec-23 however, moderated slightly to 4.2%
(November 2023: 4.6%).
1 Comprises loans to households and non-financial corporations from the banking
system, development financial institutions (DFIs) and corporate bonds issued by • For households, outstanding loan growth
non-financial corporations (including short-term papers).
2 Starting with the publication of December 2022 Monthly Highlights and Statistics
was sustained at 5.6% (November 2023:
(MHS), this series was introduced to enhance the quality of financing data. This 5.7%), supported by broadly stable growth
new data series is available in the MHS Table 2.18. across most loan purposes. This was
Source: Bank Negara Malaysia reflective of the continued demand for loans,
with the growth in loan applications higher at
26.0% (November 2023: 13.5%).

1
 Monthly Highlights
December 2023
Domestic financial markets were primarily influenced by global investors’
expectations for US policy rate reductions in 2024
• Global financial conditions were driven by
Financial Market Performance in December 2023
financial market expectations that the US
Dec-23 Nov-23 Federal Reserve would begin lowering
Ringgit 1.3 their policy interest rate as early as 2024
(%, mom) 2.4 due to continued disinflation. Reflecting
these investor sentiments, global bond
Equity 0.1 yields declined while global equity markets
(%, mom) 0.7 traded higher.
10-year MGS -7.0 • Against this backdrop, the ringgit
(bps, mom) -30.0 appreciated by 1.3% against the US dollar
(regional* average: +0.6%), while the 10-
-35 -28 -21 -14 -7 0 7 year MGS yield decreased by 7 bps
(regional* average: -29 bps).
Note: The exchange rate data is the noon-rate in the Kuala Lumpur Interbank Foreign • Meanwhile, the FBM KLCI traded slightly
Exchange Market
*Regional countries comprise: Singapore, Thailand, Philippines, Indonesia, and Korea
higher by 0.1%, in line with other bourses
Source: Bank Negara Malaysia, Bursa Malaysia (regional* average: 3.2%).

Banks maintained strong liquidity and funding positions to support intermediation

Banking System Liquidity and Funding Ratios • The banking system overall Liquidity
% %
Coverage Ratio rose in December as
Liquidity Coverage Ratio (RHS) 160.9
95 160
banks proactively managed buffers to
90 address anticipated year end seasonal
120
85 Loan-to-Fund Ratio 81.8 fluctuations in their deposit levels.
80 • The aggregate loan-to-fund ratio
80
75 40 remained broadly stable at 81.8%
70 0 (November 2023: 82.5%).
Jan 23

Jun 23

Jul 23
Dec 22

May 23

Oct 23
Apr 23

Aug 23

Sep 23

Nov 23

Dec 23
Mar 23
Feb 23

Source: Bank Negara Malaysia

Asset quality in the banking system remained intact

Banking System Asset Quality

• Overall gross and net impaired loans
ratios remained broadly stable at 1.6%
% (November 2023: 1.7%) and 1.1%
2.0 Gross Impaired Loans Ratio (November 2023: 1.0%), respectively.
1.6 • Loan loss coverage ratio (including
1.5 1.5 regulatory reserves) continues to be at a
Total Provisions to Total Loans Ratio
prudent level of 119.2% of impaired
1.0 1.1
Net Impaired Loans Ratio loans, with total provisions accounting for
1.5% of total loans.
0.5
Jan 23

Jun 23

Jul 23
Dec 22

May 23
Apr 23

Oct 23

Nov 23

Dec 23
Aug 23

Sep 23
Mar 23
Feb 23

Source: Bank Negara Malaysia

2
 PRESS RELEASE

Ref. No.: 01/24/07 EMBARGO: Not for publication or

broadcast before 1500 hours on
Wednesday, 31 January 2024

Monthly Highlights – December 2023

Headline inflation remained unchanged at 1.5% in December

• Headline inflation remained unchanged at 1.5% in December
(November 2023: 1.5%), while core inflation edged lower to 1.9%
(November 2023: 2.0%).
• In particular, the moderation in core inflation 1 was due to lower inflation
for food away from home at 3.4% (November: 3.9%).

Slightly higher wholesale and retail trade growth in November

• The Index of Wholesale and Retail Trade (IOWRT) increased by 4.7%
in November 2023 (October 2023: 4.5%).
• The expansion was driven by wholesale trade in other specialised
wholesale components followed by retail trade in other household
equipment in specialised stores.
• However, sales of motor vehicles moderated during the month.

Sustained growth in credit to the private non-financial sector

• Credit to the private non-financial sector 2,3 grew by 4.7% as at end-
December (November 2023: 4.6%), driven mainly by higher growth in
credit to businesses (3.8%; November 2023: 3.5%).
1
Core inflation is computed by excluding price-volatile and price-administered items.
 • Outstanding business loan growth increased to 3.6% (November 2023:
2.7%), driven mainly by higher growth in working capital loans. Of note,
SME loan growth continued to improve (8.2%; November 2023: 7.9%).
Outstanding corporate bonds growth, however, moderated slightly to
4.2% (November 2023: 4.6%).
• For households, outstanding loan growth was sustained at 5.6%
(November 2023: 5.7%), supported by broadly stable growth across
most loan purposes. This was reflective of the continued demand for
loans, with the growth in loan applications higher at 26.0% (November
2023: 13.5%).

Domestic financial markets were primarily influenced by global

investors’ expectations for US policy rate reductions in 2024
• Global financial conditions were driven by financial market expectations
that the US Federal Reserve would begin lowering their policy interest
rate as early as 2024 due to continued disinflation. Reflecting these
investor sentiments, global bond yields declined while global equity
markets traded higher.
• Against this backdrop, the ringgit appreciated by 1.3% against the US
dollar (regional* average: +0.6%), while the 10-year MGS yield
decreased by 7 bps (regional 4 average: -29 bps).
• Meanwhile, the FBM KLCI traded slightly higher by 0.1%, in line with
other bourses (regional average: 3.2%).

Banks maintained strong liquidity and funding positions to support

intermediation
• The banking system overall Liquidity Coverage Ratio rose in December
as banks proactively managed buffers to address anticipated year end
seasonal fluctuations in their deposit levels.

2
Comprises loans to households and non-financial corporations from the banking system, development financial
institutions (DFIs), and corporate bonds issued by non-financial corporations (including short-term papers).
3
Starting with the publication of December 2022 Monthly Highlights and Statistics (MHS), this series was
introduced to enhance the quality of financing data. This new data series is available in the MHS Table 2.18.
4
Regional countries comprise: Singapore, Thailand, Philippines, Indonesia, and Korea.

Published by:
Strategic Communications Department, Level 14, Block B, Bank Negara Malaysia,
Jalan Dato’ Onn, 50480 Kuala Lumpur, Malaysia.
E-mail: communications@bnm.gov.my
Web: www.bnm.gov.my
 • The aggregate loan-to-fund ratio remained broadly stable at 81.8%
(November 2023: 82.5%).

Asset quality in the banking system remained intact

• Overall gross and net impaired loans ratios remained broadly stable at
1.6% (November 2023: 1.7%) and 1.1% (November 2023: 1.0%),
respectively.
• Loan loss coverage ratio (including regulatory reserves) continues to be
at a prudent level of 119.2% of impaired loans, with total provisions
accounting for 1.5% of total loans.

Bank Negara Malaysia

31 January 2024

Published by:
Strategic Communications Department, Level 14, Block B, Bank Negara Malaysia,
Jalan Dato’ Onn, 50480 Kuala Lumpur, Malaysia.
E-mail: communications@bnm.gov.my
Web: www.bnm.gov.my