‘Healthiest’ Malaysian banks since 1998. Wow!

Do you believe the Malaysian economy is still doing fine? I know, majority would answer, NO. How could it be right, since we have bad news everyday? It’s okay, I give you one piece of good news about the banks’ ‘health’ condition today. In a Bloomberg article published in a local English daily, it was reported that total bad loans are at its lowest levels since 1998 for Malaysian banks. Bad loans are loans which were borrowed but never paid. Thus low levels of bad loans meant that majority of everyone who borrowed were able to pay their loans on time.
Before we cheer and jump for joy, Standard & Poor’s said that we should be careful with this piece of good news because this may be a cycle and the current numbers may already be the bottom and it can only start going up from now. S&P credit analyst in Singapore Ivan Tan said, “Loan quality is possibly at a cyclical peak. The non performing loan ratio is probably as good as it can get.” The lowest point was reached in April where the non performing dues as a total portion of total loans fell to 1.17%. Yes, this means that only 1.17% out of the total loans could not be paid on time.
Another reason why the banks are ‘healthy’ is because the unemployment rate remains extremely low at just 3%. This meant that Malaysians were able to continue servicing their debts. Thus, one good sign to know when the bad loans would start increasing would be the total unemployment rate. One negative blip is that the number of bankruptcy cases among Malaysians are increasing year after year. Would this be continuing? Well, according to the Consumer Association of Penang (CAP), a total of 55 Malaysians are going bankrupt every day and Malaysians are using up 44 percent of their income to pay for their debts. If this shows an uptrend, then the bad loans would definitely be increasing in future.
Personally, I would certainly hope that majority of everyone who reads kopiandproperty.my are using 44 percent of their income for property and not on the unnecessary. Happy spending.
written on 9 July 2015
next suggested article: Household Debt Malaysia? Better.