taklimat laporan tahunan (bnm) 2014 dan laporan kestabilan kewangan dan sistem pembayaran 2014

Taklimat Laporan Tahunan 2014 dan Laporan Kestabilan Kewangan dan Sistem Pembayaran 2014 Gabenor Bank Negara Malaysia 11 Mac 2015

1

Embargo

Not for publication or broadcast before 1800 hours on Wednesday, 11 March 2015

2

Malaysia was among the fastest-growing economies in Asia

Domestic Demand: 2014

Source: IMF, Bank Negara Malaysia, Department of Statistics, Malaysia

p preliminary

* Figure refers to fiscal year prior to the rebase of GDP calculations

4.7

6.0

-2

-1

0

1

2

3

4

5

6

7

8

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4p

Malaysian economy recorded a stronger growth

of 6.0% in 2014 Annual

change (%)

Within the region, Malaysia was among the

fastest-growing economies

7.4

6.1 6.0 5.8

5.0

3.7 3.3 2.9

0.7

0

1

2

3

4

5

6

7

8

PR

Chin

a

Phili

ppin

es

Ma

laysia

Ind

ia*

Ind

one

sia

Ch

inese

Taip

ei

Kore

a

Sin

ga

po

re

Thaila

nd

Annual

change (%) Real GDP Growth Real GDP Growth

Global growth: 3.3%

-4.0

-1.1

1.4 1.5

-0.5

0.7

0.8 0.6

3.0

2.0 1.8

4.1

3.6 3.7

5.6

4.7 6.0

-6

-4

-2

0

2

4

6

8

10

12

2012 2013 2014p

Private Consumption Private Investment

Public Consumption Public Investment

Change in Stocks Net Exports

GDP Growth

• Private consumption: Supported by

favourable income growth and stable labour

market conditions

• Private investment: Driven by the

manufacturing and services sectors

• Positive contribution from net exports

Growth in 2014 driven by private domestic demand and external trade

p preliminary

Source: Department of Statistics, Malaysia

3

Contribution to

growth (ppt.) Real GDP Growth

Global growth to remain moderate in 2015

5.4

4.1

3.4 3.3 3.3 3.5

0

1

2

3

4

5

6

7

8

2010 2011 2012 2013 2014e 2015f

Annual change (%)

Emerging

Economies

Advanced

Economies

L

4

Real GDP Growth

Global

• Global economy to remain on a moderate growth

path in 2015, supported by:

- Improving fundamentals, particularly in the US

- Lower commodity prices

- Accommodative monetary policies

• Growth performance in the major economies to

become more divergent

- US: Strengthening private sector activity

- Euro area & Japan: Subdued growth amid

persistent structural weaknesses

- PR China: Growth to moderate, in line with

policymakers’ objective to rebalance the economy

Source: IMF and Bank Negara Malaysia estimates

Growth in Asia to improve, supported by

higher domestic demand and exports

5

In Asia, growth will be underpinned by domestic demand and supported by external demand

In particular, Asia’s exports will continue to

benefit from higher demand from the US

US Imports by Origin (2014: % Share of Total Imports)

Other

Emerging

Economies

31%

PR China

20%

ASEAN-4**

& NIEs

9%

Euro area,

UK & Japan

22%

Other

Advanced

Economies

18%

Source: Asian Development Bank, Haver, and National authorities

* EA-7 refers to Chinese Taipei, Hong Kong SAR, Indonesia, Korea, the Philippines, Singapore and Thailand

** ASEAN-4 refers to Indonesia, Malaysia, the Philippines and Thailand, while NIEs refers to Chinese Taipei, Hong Kong SAR, Korea and Singapore

*** PR China, NIEs and ASEAN-4 account for the majority of US imports from Asia

29% of US

imports are

sourced

from Asia***

4.6

0

1

2

3

4

5

201

3

201

4

201

5f

Domestic DemandNet Exports

3.8 3.7

Real GDP Growth of EA-7*

Annual change (%)

Global inflationary pressures to remain modest amid lower commodity prices

Lower commodity prices to contain

inflationary pressures across economies

Global commodity prices are expected to

remain low in 2015 amid excess supply

0

1

2

3

4

5

6

Ja

n-1

0

Ja

n-1

1

Ja

n-1

2

Ja

n-1

3

Ja

n-1

4

Ja

n-1

5

G3**

Asia*

Annual change (%)

6

Source: Haver, IMF and Bank Negara Malaysia estimates

* Asia refers to Chinese Taipei, Hong Kong SAR, Indonesia, Korea, Malaysia, the Philippines, PR China, Singapore and Thailand

** G3 refers to the US, euro area and Japan

0

50

100

150

200

250

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5 f

Food

Metal

Crude Oil

Index (2005=100)

Fed’s Median Interest Rate Projection

(as of Dec 2014)

0

10

20

30

40

50

60

70

80

90

100

Ja

n-0

8

Ja

n-0

9

Ja

n-1

0

Ja

n-1

1

Ja

n-1

2

Ja

n-1

3

Ja

n-1

4

Ja

n-1

5

Ja

n-1

6

ECB

BOJ

Fed

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Ja

n-0

8

Ja

n-0

9

Ja

n-1

0

Ja

n-1

1

Ja

n-1

2

Ja

n-1

3

Ja

n-1

4

Ja

n-1

5

Ja

n-1

6

Ja

n-1

7

ECB

BOJ

Fed

Divergence in monetary policy amongst the major advanced economies

ECB and BOJ will continue to increase monetary

accommodation through higher asset purchases …

Source: National authorities, Haver, Bank Negara Malaysia estimates

Central Bank Balance Sheet Size

% of GDP

7

Forecast

…whereas Federal Reserve could begin interest rate

normalisation in 2015 amid stronger growth

Rate (%)

Forecast

Downside risks to global growth remain

Prolonged weakness in domestic demand and persistence of disinflation or

deflation in several major economies

Uncertainties over monetary policy adjustments in major advanced economies

Uncertainty over commodity price movements affecting growth prospects of

other emerging economies

1

2

3

8

Emerging economies will continue to be confronted with large and volatile capital flows

L

9

• Recent capital outflows from many EMEs caused

by uncertainties in the global economic, financial

and policy environment

• Despite the depreciation of exchange rates, the

domestic financial systems of the regional

economies have proved to be resilient in the face

of such outflows

2.5

1.6

0.4

0.6

1.1

0.7

0.0

1.5

-1.0

3.4

1.6

0.4

-0.3

-0.4

-0.4

-0.5

-0.7

-3.7

-5 -3 -1 1 3 5

India

Korea

Singapore

Malaysia

Indonesia

Russia

Thailand

Taiwan

Brazil

1 Sep 2014 - 25 Feb 2015 1 Feb 2014 - 29 Aug 2014

USD bn

Portfolio Flows of Selected Emerging Economies

Source: EPFR Global

The Malaysian economy to remain on a steady growth path of 4.5 – 5.5% in 2015

• Domestic demand will continue to drive

growth, led by private sector spending

• All economic sectors to experience

continued expansion

• External sector to remain resilient

L

-2

-1

0

1

2

3

4

5

6

7

8

2008 2009 2010 2011 2012 2013 2014p 2015f

Annual change (%)

5.5

4.5

6.0

Despite external shocks, growth to remain on steady trajectory amid strong

underlying fundamentals

Source: Department of Statistics, Malaysia and Bank Negara Malaysia

p preliminary f forecast

10

Economic restructuring accords Malaysia the resilience to weather the challenging external environment

11

Shifts in economic activity have resulted in

a more diversified economic structure

Malaysia: Economy by Sector (2014)


Higher private participation in the economy

(70% of GDP)

Diverse export structure across products

and markets

Resilient and well-developed financial

system, supporting growth

1

2

3

Reaping the benefits of Malaysia’s economic

restructuring and reforms

Services

55% Manufacturing

25%

Mining

8%

Agriculture

7%

Construction

4%

Domestic demand will continue to drive growth in 2015



12

Contribution to

growth (ppt.)

6.0

4.5 – 5.5

-2

-1

0

1

2

3

4

5

6

7

8

2014p 2015f

Private Consumption Private Investment

Public Consumption Public Investment

Change in Stocks Net Exports

Real Gross Domestic Product (GDP) Real GDP

Annual change (%)

% share

of GDP

(2014)

2014p 2015f

Domestic demand

(excluding stocks) 93.1 6.0 6.0

Private expenditure 70.0 8.0 6.7

Private consumption 52.5 7.1 6.0

Private investment 17.5 11.0 9.0

Public expenditure 23.0 0.2 3.7

Public consumption 13.2 4.4 2.7

Public investment 9.8 -4.9 5.1

Gross Fixed Capital Formation 27.3 4.7 7.6

Net exports of Goods

& Services 8.0 19.7 -7.8

Exports of Goods & Services 88.8 5.1 3.0

Imports of Goods & Services 80.8 3.9 4.0

Real GDP 100.0 6.0 4.5 – 5.5

Real GDP

Annual change (%)

% share

of GDP

(2014) 2014p 2015f

Services 55.3 6.3 5.6

Manufacturing 24.6 6.2 4.9

Mining 7.9 3.1 3.0

Agriculture 6.9 2.6 0.3

Construction 3.9 11.6 10.3

Real GDP 100.01 6.0 4.5 – 5.5

Continued expansion across all economic sectors

• Services

- Supported by consumption- and

trade-related sub-sectors

• Manufacturing

- Continued growth in electronics and

electrical (E&E) sector

• Mining

- Rising oil production

• Agriculture

- Lower production of palm oil and rubber

amid lower prices

• Construction

- Driven by activity in residential and

non-residential sub-sectors

1 Numbers do not add up due to rounding and exclusion of import duties



13

Services and manufacturing sectors to underpin growth

7.5

5.2

0.5 0.3

0

2

4

6

8

10

12

14

2015f

Real private consumption

6.0

5

6

7

8

201

0

201

1

201

2

201

3

201

4p

201

5f

Annual change (%)

Unemployment and salary Government measures and savings

RM bil

While growth is affected by GST

and lower earnings in commodity

sectors…

…it remains supported by

stable labour market conditions

and continued growth in salary…

…and additional income from

Gov’t measures and savings

from lower fuel prices

Private consumption is projected to grow by 6.0% in 2015

Avg. (‘90-’14): 6.7%

Note: * Disbursed to primary and secondary school students; Source: Department of Statistics, Malaysia, MEF Salary Survey, Bank Negara Malaysia


Bantuan Rakyat

1Malaysia (BR1M)

Savings from

lower fuel

prices

RM 100 cash assistance program*

Baucar Buku

1Malaysia (BB1M)

2.8 2.9

5.4 5.8

2.9 3.0

2

3

4

5

0

1

2

3

4

5

6

7

2013 2014p 2015f

Annual change (%) % share of

labour force

Salary increment

Unemployment rate (RHS)

Employment growth

13.5

14

Private investment to be supported by a steady flow of projects

18.4

9.4

22.8

13.1

11.0

9.0

0

5

10

15

20

25

201

0

201

1

201

2

201

3

201

4p

201

5f

Source: Department of Statistics, Malaysia, Malaysian Investment Development Authority (MIDA) and Bank Negara Malaysia

Avg. (‘90-’14): 8.5%

15


Private investment to expand

by 9.0%...

58%

64%

42%

36% 52.1

71.9

0

20

40

60

80

2013 2014

Domestic-oriented

Export-oriented

Record-high manufacturing

investment approvals point

to sustained investment

RM bil

Private (64%)

Services

Agriculture

Manufacturing

Mining

Construction

% share of

real GFCF

Public

(36%)

% share of real private

investment (sector)

3 5

16

51

26

…driven mainly by investment in the

manufacturing and services sectors

Annual change (%)

-3.1

-4.6

-6.7

-5.4 -4.8

-4.5

-3.9 -3.5

-3.2

-8

-7

-6

-5

-4

-3

-2

-1

0

-80

-70

-60

-50

-40

-30

-20

-10

0

2007 2008 2009 2010 2011 2012 2013 2014 2015e

% of GDP RM billion

Federal Government Fiscal Balance

RM billion % of GDP (RHS)

Fiscal consolidation will remain on course despite low oil prices

e latest estimate reflecting Prime Minister’s speech on 20 Jan 2015

Source: Ministry of Finance, Malaysia

16

Earlier fiscal reform measures have yielded positive results

17

Dependency on oil revenue has declined

Expenditure reforms is underpinned by the removal of the fuel subsidy, which will reduce the

operating expenditure

GST implementation will broaden the revenue base

1

2

3

Trade balance to remain in substantial surplus amid more moderate export growth



18

Malaysia’s Trade Performance Trade

Annual change (%) % share

(2014) 2014p 2015f

Gross exports 100.0 6.4 1.5

Manufactured 76.9 7.3 8.4

E&E 37.3 8.4 14.1

Non-E&E 39.6 6.3 3.0

Commodities 22.7 4.5 -22.6

Agriculture 9.0 0.6 -10.8

Minerals 13.7 7.3 -30.4

Gross imports 100.0 5.3 6.0

Capital goods 14.1 -2.1 10.0

Intermediate goods 59.8 7.6 6.8

Consumption goods 7.4 5.7 6.8

Manufactured exports to benefit from improvement in major advanced economies

83.1

53.6

40

50

60

70

80

90

100

110

120

130

200

300

400

500

600

700

800

900

201

0

201

1

201

2

201

3

201

4p

201

5f

Exports Imports Trade Balance (RHS)

RM bil RM bil

Note: NIEs include Hong Kong, Singapore, Korea and Chinese Taipei, while ASEAN-3 include Thailand, Indonesia and Philippines

19

Diversified trade structure in terms of products and markets mitigates the impact of external developments

US 8%

PR China 12%

Japan

11% EU27

9%

NIEs*

26%

Rest of

World

22%

ASEAN-3*

11%

Malaysia’s Exports by Products Malaysia’s Exports by Markets

Sources: Department of Statistics, Malaysia and Bank Negara Malaysia

Chemical &

chemical products

6.7%

E&E, 37.4%

Manufactures

of metal

3.5%

Other

non-E&E

20%

Rubber & other

commodities

3.7%

Oil-

related

14%

Commodities

23%

Crude oil

4.4%

Refined petroleum

products

9.2%

LNG

8.4%

CPO

6.1%

Others

0.7%

Manufactured exports constitute the largest

share of total exports

Higher share of exports to regional countries

amid strengthened trade linkages

Current account surplus to remain in 2015

Source: Department of Statistics, Malaysia


20

Current account

component (net)

2014p 2015f

RM billion

Goods 125.1 94.2

Services -20.5 -16.4

Primary income -37.4 -38.0

Secondary income -17.6 -18.5

Current account balance 49.5 21.4

% of GNI 4.8 2 – 3

The narrowing of the current account surplus to 2 – 3% of GNI is consistent with

global rebalancing and structural transformation in the domestic economy

15.1

17.6

4.8 2-3

-12

-8

-4

0

4

8

12

16

20

24

-100

-50

0

50

100

150

200

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4p

201

5f

Goods Services

Primary income Secondary income

% of GNI (RHS)

RM bil % of GNI Current Account Balance

21

Narrowing savings-investment gap driven by strength in investment activity

Savings-Investment Gap

0

50

100

150

200

250

300

350

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4p

201

5f

Gross Capital Formation

Savings-Investment Gap

RM bil

Gross National Savings

• Strong growth in investment activity has

been a key feature of the structural

transformation in the economy

• Investments undertaken in new growth

areas, high value-added industries and

infrastructure will further lift productive

and exports capacity of the economy



Ringgit movements driven by external factors

Note: REER uses latest daily NEER and latest available (monthly) inflation data

Source: Bank Negara Malaysia

22

• Depreciation of the ringgit and regional

currencies reflects the US dollar strength

• A larger adjustment in the ringgit is due to

concerns on the impact of lower oil prices on

the Malaysian economy

• The exchange rate is neither a demand

management tool nor a policy instrument to

affect export competitiveness

-3.5

7.0

6.0

-1.4

4.4

2.1

0.2

5.5

1.5

3.8

-1.4

3.2

3.8

5.8

5.5

-17.8

-17.7

-14.4

-14.3

-10.4

-9.6

-9.2

-8.7

-5.2

-3.5

-1.9

-1.9

-1.4

-6.4

-6.2

-20 -15 -10 -5 0 5 10

EUR

AUD

MYR

JPY

IDR

SGD

GBP

KRW

TWD

INR

CNY

THB

PHP

REER*

NEER

1 Sep 2014 - 9 Mar 2015 1 Feb 2014 - 29 Aug 2014 %

Performance of Selected Currencies

against the USD

Malaysia is better positioned to intermediate volatile capital flows

Such sizeable reversals of capital flows have been

experienced before

Note: 1Reserves data up to 27 Feb 2015

Source: BNM

• Ability to absorb the volatility of these flows and

contain its spillover effects on the real economy

– Well-developed financial markets and resilient

banking system

– A wider range of tools and increased policy

flexibility

– Bigger buffers built over the years

• Despite the recent outflows, conditions in the

domestic financial market and foreign exchange

market has remained orderly

23

-39.3

-19.1 -21.0

-28.5

-5.5

-21.51

-45

-40

-35

-30

-25

-20

-15

-10

-5

0

GFC(Mar '08 - Mar '09)

Taper tantrum(22 May - 28 Aug

'13)

Current(1 Sep '14 - 9 Mar

'15)

USD billion

NR Portfolio Flows Change in Reserves

NR Portfolio Flows, Reserves and Ringgit Performance

(-12.6)

(-9.7) (-14.4)

(% Change in

MYR/USD)

24

Ample international reserves provide important buffer


Reserves to short-term external debt coverage at 1.1

times is adequate for a country that has higher

degree of economic and financial openness

0

2

4

6

8

10

12

0

20

40

60

80

100

120

140

160

1991 1994 1997 2000 2003 2006 2009 2012 As at27

Feb2015

USD bil Net International Reserves

Net International Reserves

Retained import cover (RHS)

Reserves/ST ext debt (RHS)

27 Feb 2015:

USD110.5 bil

1997:

USD21.7 bil

Times

Reserves have increased about five-fold since

the Asian Financial Crisis

Malaysia is the most financially open economy

in East Asia after Hong Kong and Singapore

High degree of financial openness reflected

by:

– High presence of non-resident participation

in the domestic financial market

– Increased regionalisation of domestic banks

– Progressive liberalisation of the capital

account

1

2

Short-term external debt position reflects greater financial integration and more developed financial markets

Source: Bank Negara Malaysia, Bank of International Settlements, Asian Development Bank, Haver Analytics

Non-Resident

deposits, 24%

Others, 20%

Interbank

borrowing

39%

Money market

instruments

17%

Mainly the banks’

centralised foreign

currency liquidity

management

25

SG HK MY ID TH KR

Banks’ external asset

position

(% share of GDP) 1

116.9 20.2 21.4 4.2 n.a. 15.6

Bond market

capitalization

(% share of GDP) 2

81.9 68.3 103.8 15.2 76.3 123.2

NR holdings

(% share of govt.

bonds) 3

n.a. 7.4 28.3 37.3 17.3 10.6

1 end-Sep 2014 (except Malaysia end-Dec 2014)

2 end-Dec 2014 (except Hong Kong and Korea end-Sept 2014)

3 Mar ‘14 (HK), Sep ‘14 (KR), Feb ‘15 (MY, ID, TH)

Mainly trade credits and

intercompany loans

Non-resident (NR) holdings,

mainly in BNM Monetary Notes

Malaysia compares favourably in terms of financial

integration and financial market depth

Risks are well contained as the bulk of

short-term external debt reflects

increasing regionalisation of our banks

Headline inflation to range between 2 – 3% in 2015

• Lower inflation reflects the decline in global energy and

commodity prices

• Lower domestic fuel prices and moderate demand

conditions would partly offset the impact from GST

• Households will benefit through higher disposable

income from lower fuel prices


0

1

2

3

4

5

6

2008 2009 2010 2011 2012 2013 2014 2015f

Annual change (%)

Inflation forecast

3.0

3.2

2.0

Historical avg.

(1991-2014) = 3%

26

Monetary policy will focus on ensuring steady growth amid contained inflation outlook

• Monetary policy in 2015 will focus on

supporting the steady growth of the economy,

amid a contained inflation outlook

• The risks of destabilising financial imbalances

will continue to be monitored

Overnight Policy Rate (OPR)


27

3.25

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Feb-0

9

Aug

-09

Feb-1

0

Aug

-10

Fe

b-1

1

Aug

-11

Feb-1

2

Aug

-12

Feb-1

3

Aug

-13

Feb-1

4

Aug

-14

Feb-1

5

%

Financing continues to be supportive of economic activity

151 184 220 232 239

0

300

600

900

1200

201

0

201

1

201

2

201

3

201

4

Funds Raised via Capital Markets

Loan Disbursements by the Banking System and DFIs

Loans Disbursed to SMEs

RM billion

986

763 847

984

Gross Financing through Loans

and the Capital Markets*

• Going forward, financing activity is expected to

remain robust

- Continued availability of financing for businesses,

especially for SMEs from the banking system and the

DFIs

- Funds raised from the capital market to remain high

given committed investment projects in the pipeline

• Supported by ample liquidity conditions

- Outstanding surplus liquidity with BNM remains high

at RM269.9 billion in 2014

1,107

28

*Comprises gross loans from the banking system and DFIs, and gross funds raised from the capital markets


Low borrowing costs to the private sector

29

• Private sector will continue to benefit from

low financing costs

• Despite financial market volatilities, cost of

financing from capital markets remain

supportive of fund raising activities

- Strong domestic investor base allows

Malaysia to meet domestic financing needs

without relying on external sources of funds

2

3

4

5

6

7

Overall privatesector

Overallbusinesses

SMEs Large Corporate(5y AAA PDS)

Long-run average* Jan-15


Interest Rates to the Private Sector

Note: * Average (Jan 2002 – Dec 2014)

%

55.5

103.8

11.8

15.2

0

10

20

0

50

100

150

1998 2014

Size of Bond Market

Capital Ratio* (RHS)

Malaysia’s macroeconomic fundamentals remain supportive of growth

60.4 60.7

68.8 70.0

50

60

70

80

2008 2010 2012 2014p

% share

3.3

3.7

3.1

2.9 2.5

3.0

3.5

4.0

2008 2010 2012 2014p

%

5.4

0.6 2.1

3.2

0

4

8

2008 2010 2012 2014

Annual

change (%)

Steady growth path High private sector

participation in the economy

Low and stable

inflation environment

Stable labour market conditions

Deeper markets and

strong financial buffers

4.8

-1.5

4.7 6.0

-4

0

4

8

12

2008 2010 2012 2014p

Current account balance

reflects strong investment

17.6 15.8

4.2 4.8

0

10

20

30

2008 2010 2012 2014p

Annual

change (%)

% of GNI


Current account balance Inflation

GDP Private expenditure / GDP Unemployment rate

30

% of nominal GDP

Size of Bond Market

and Banking Capital Ratio

%

* Capital ratio in ‘98 refers to the risk-weighted capital ratio; Ratio in 2014 refers to total capital ratio, reported based on Basel III

Capital Adequacy Framework adopted since January 2013.

Malaysia remains resilient in an uncertain external environment

31

• The Malaysian economy to remain on a steady growth path of 4.5 – 5.5%, driven by

domestic demand

- Economic diversification and structural reforms to mitigate adverse external developments

- Accommodative monetary policy that is supportive of economic activity

- Pro-growth and targeted policy measures such as assistance to SMEs and low-income households

• Current account to remain in surplus

- Diversified export markets and products

• Lower inflation of 2 – 3%

• Malaysia has the capacity to deal with capital flows

- Well-developed and resilient financial system and deep capital market

- Ample reserves with a wide range of monetary policy instruments

- Flexible exchange rate

32

Financial position remained stable in 2014:

• Total assets of BNM amounted to RM427.6 billion with

International Reserves of RM405.4 billion (USD 115.9 billion)

• Net profit of RM6.38 billion

• Dividend of RM3.0 billion to the Government

Bank Negara Malaysia: Annual Financial

Statements 2014

33

Bank Negara Malaysia: Annual Financial

Statements 2014

RM bil

Total Income 8.48

Less:

Recurring Expenditure 1.15

Development Expenditure 0.95

Total Expenditure 2.10

Net Profit 6.38

Income Statement

(Year ended 31 December 2014)

0

100

200

300

400

500

Assets

Other AssetsLand and BuildingsLoans and AdvancesDeposits with FIsMGSSDRIMF Reserve PositionGold and Foreign Exchange

Statement of Financial Position

(as at 31 December 2014)

RM bil

0

100

200

300

400

500

Liabilities and Capital

Total Capital

Total Liabilities

RM bil

34

Financial Stability And Payment Systems Report 2014

Financial stability outlook for 2015 remains positive


• Financial intermediation will remain

supportive of economic activities

• Market conditions are expected to

remain orderly despite higher volatility

• Financial institutions continue to

maintain strong capital and liquidity

buffers

35

Banking Sector (%) 2013 Jan 2015

Capitalisation

Common equity tier 1 ratio

Total capital ratio

Excess capital buffer (RM bil)

12.6

14.9

85.5

12.4

15.1

97.1

Profitability

Return on assets

Return on equity

1.5

15.9

1.5*

15.2*

Asset Quality

Net impaired loans ratio

Loans in arrears (1-<3 mths)

1.3

2.9

1.2

2.4

Liquidity Position

Liquidity buffer (<1 mth, % of deposits)

14.7

15.6

Insurance/Takaful Sector (%) 2013 2014

Capitalisation

Capital adequacy ratio – Insurance

Capital adequacy ratio – Takaful

Capital buffer (RM bil)

246.1

n/a

23.5

253.0

192.8

30.2

Profitability

Profit (RM bil)

16.4

16.9

* Refers to December 2014 position

• Growth in household debts moderated to

the slowest pace of 9.9% since 2010

‒ Continued deceleration in personal

financing

‒ Higher quality of new borrowings amid

strengthened affordability assessments

‒ Lower share of debt attributed to more

vulnerable households

• Receding risks from the property market

- Slower growth in average house prices

since 4Q 2013

- Speculative purchases with borrowings

remain in check

Sustained moderation in the growth of household debt and property prices

36

RM bil Annual change (%)

856 940

1,903 2,013

0

4

8

12

16

0

500

1,000

1,500

2,000

2,500

2010 2011 2012 2013 2014Debt Financial asset

Debt growth (RHS) Financial asset growth (RHS)

Household Debt and Financial Assets

02468101214

0

4

8

12

16

20

1Q2007

1Q2008

1Q2009

1Q2010

1Q2011

1Q2012

1Q2013

1Q2014

Borrowers with ≥3 HL MHPI (RHS)

LTV 70%

Malaysian House Price Index (MHPI) and

Number of Housing Loan (HL) Borrowers Annual change (%) Annual change (%)

LTV 60%

Corporate leverage remains within prudent levels

• Corporate leverage remained low at 42.7%

- Further supported by a healthy median

interest coverage ratio of 6.4 times

• Negligible growth in external borrowings

- Mainly intragroup funding for Malaysian and

overseas operations by multinational and

larger domestic corporations

• Quality of business loans remained sound,

with broad-based improvements in

delinquency and impairment trends

37

131.7%

88.3% 93.3% 98.4% 96.9%

45.5

42.5

40.0

42.7

30

35

40

45

50

55

0

50

100

150

1998 2011 2012 2013 2014p

Domestic Loans to GDP Domestic PDS to GDP

External debt to GDP Debt-to-Equity ratio (RHS)

Business Sector:

Leverage and Composition of Debt

% of GDP %

Limited risk of contagion from external exposures

38

• Centralised liquidity management

practices of banks contributed to

higher external exposures of financial

institutions, mainly in Asia

• Overseas operations of domestic

banking groups continued to maintain

healthy growth and profits, and a stable

risk profile

• Banks continue to proactively manage

foreign currency mismatch positions

-30

-20

-10

10

20

M J S D M J S D M J S D M J S D M J S D

2010 2011 2012 2013 2014

RM bil

All maturity <1 week <1 month

Banking System: US Dollar Liquidity Mismatch

-40

-20

0

20

40

-450

-350

-250

-150

-50

50

150

250

2010 2011 2012 2013 2014

Debt securities LoansDeposits Equity & retained earningsOthers Growth in total external assetsGrowth in total external liabilities

RM bil

As

se

ts

Lia

bilit

ies

Annual change (%)

Banks’ External Assets and Liabilities by Instruments

Strengthening the banking and insurance sectors

• Further strengthening of prudential framework, driven by the global reform agenda

and domestic reforms

• Insurance and takaful reforms to promote efficiency, enhance protection and ensure

long-term sustainability

39

New motor cover

framework

Life Insurance and

Family Takaful

Framework

(LIFE Framework)

• Market-based pricing to be phased in beginning 2016

Wider access through direct channels and product aggregators

for consumers to compare and purchase insurance/takaful

Larger pool of qualified

financial advisers

Improved incentive

structures to drive

professional conduct and

service quality

1

3 2

Further development of financial markets

40

• Continued growth of the debt securities, sukuk

and foreign exchange (FX) markets

- Total outstanding debt securities and sukuk

grew by 8.2%, with more diverse currency

and investor base

• Wider use of renminbi supported by liquidity

management and clearing facilities

- Operationalisation of the Renminbi Deposit

and Investment Facility

- Appointment of a designated Renminbi

clearing bank in Malaysia

• Enactment of the Netting of Financial

Agreements Act 2014

0

200

400

600

800

1000

1200

2009 2010 2011 2012 2013 2014

Public Sector Private Sector

RM bil Outstanding debt securities and sukuk

Average daily turnover of foreign exchange market

0

2

4

6

8

10

12

14

2009 2010 2011 2012 2013 2014

USD bil

Strengthened arrangements to better protect consumers

41

Strengthened redress mechanisms through the transformation of

the Financial Mediation Bureau into

an approved Financial Ombudsman Scheme

Ongoing financial education

initiatives

More balanced pre-

contractual disclosure

obligations and

proportionate remedies for

insurance / takaful contracts

1

3 2

Financial

Consumer

Protection

Initiatives

Financial inclusion remains a priority

Pilot microinsurance and microtakaful

projects

1

3

Improved access to financing

22% have access

through agent

banks

77% have access through

both bank branches and

agent banks

42

Implementation of a systematic financial

inclusion monitoring framework 2

4 Amendments to the Development

Financial Institutions Act

Total

population:

30.3 mil

0.4% have access

through bank branches Less than 1% is

unserved

99% of population have access to banking

services, through the following channels:

Significant progress achieved towards deeper regional financial integration

• Conclusion of Sixth Package of Financial Sector Commitments under the ASEAN

Framework Agreement on Services (AFAS) in Q1 2015

• Finalisation of ASEAN Banking Integration Framework (ABIF)

- Completed the multilateral framework for the implementation of the banking integration

process

- Supported by a network of bilateral agreements between countries

- Signing of Heads of Agreement between Bank Negara Malaysia, Bank Indonesia and

Otoritas Jasa Keuangan in December 2014

• Enhancing integration of regional payment systems

- Adoption of the Principles of Product Transparency on Cross-border Trade Settlement to

enhance the efficiency of trade settlement between ASEAN economies

43

2014

Malaysia continues to advance as an international

marketplace for Islamic finance Components of GIFDI1

Quantitative Development

Knowledge

Governance

Corporate Social Responsibility

Awareness

Malaysia’s rank

1st

2nd

8th

1st

2nd

44

• Global leader in Islamic finance development

• Inclusion of Malaysian Government

Investment Issues (GII) in the Barclays

Global Aggregate, Asian Pacific Aggregate

and Emerging Markets Local Currency

Government indices effective 31 March 2015

• Increased vibrancy in the multi-currency

sukuk marketplace

- Five more ‘Emas’ foreign currency-

denominated sukuk.

- World’s first yen-denominated sukuk issued

in Malaysia

Source: ICD Thomson Reuters, Islamic Finance Development Report 2014; Bloomberg, KFH Research

Vibrancy of Multicurrency Sukuk Issuances (USD bil)

1.20

0.08 0.16

0.48

2010 2011 2012 2013

SGD

RMB RMB

SGD

JPY

0.02

USD

1.85

USD

2.00

USD

1.16

USD

1.80

USD

2.33

JPY

1 Global Islamic Finance Development Indicator by ICD Thomson Reuters

45

Increased adoption of electronic payments for retail payment transactions

R

Notable progress made since commencement

of pricing reforms in May 2013

Cheque and IBG Transaction Volume

Incentive fund framework and payment

card reforms

Incentives for customers to migrate

to e-payments

Transparency requirements

Promote comparison shopping and

competition

Building awareness and confidence

Media campaigns, roadshows and outreach

programs

0

5

10

15

20

25

Jan-11 Jan-12 Jan-13 Jan-14 Jan-15

IBG fee lowered from RM2

to 10 sen

Cheque

IBG

Imposition of 50 sen

cheque fee


2013 2014

% increase (+) / % decrease (-)

Usage of Cheques - 3 - 10

IBG Transactions + 19 + 36

Continuous efforts to drive and sustain

e-payment adoption

million

Management of cyber risks

Critical IT systems remain resilient and

customer information is adequately protected

New arrangements to complement existing talent development initiatives

46

FSTC

Elevating the standards of

professionalism, quality and ethics

Comprehensive talent development institutions

Financial Services

Talent Council

• Establishment of the Financial Services Talent

Council and Financial Services Professional Board

to raise the supply and quality of financial

professionals

• Continued focus on ensuring high standards of

professional learning programmes

- Finance Qualification Structure and FAA

Learning Standards

- Financial Institutions Directors’ Education in

Islamic Finance (FIDE-i) and Shariah Leaders

Education Programme

- Transformation of IBBM into Asian Institute of

Chartered Bankers and Asian Banking School

http://fspb.com/

http://www.iclifgovernance.org/

Discussion

taklimat laporan tahunan (bnm) 2014 dan laporan kestabilan kewangan dan sistem pembayaran 2014

Economy & Finance