MONEY
Financial intermediation process remains supportive of business needs, BNM annual report finds
PUBLISHED: MARCH 11, 2015 06:50 PM
KUALA LUMPUR, March 11 — The financial intermediation process has remained supportive of the financing needs of the economy.
New financing extended by the banking system to the private sector grew by 13.3 per cent last year, says Bank Negara Malaysia (BNM) in its Annual Report 2014 released here today.
The central bank said over 70 per cent of loans disbursed were channelled to businesses, of which 30.4 per cent were extended to small and medium enterprises.
Despite greater volatility in the financial markets, orderly conditions continued to support corporate fund raising activity.
Greater collaboration between BNM, the financial industry, businesses and relevant government agencies helped address the issues that constrained bank financing to businesses in new growth industries.
In the insurance and takaful sectors, reforms to promote competition, address pricing distortions and improve value to policyholders continued to be a priority.
BNM said the reforms would contribute towards the long-term sustainability of the industry, while encouraging more Malaysians to secure the insurance and takaful protection that they need.
Major component of the reforms were the Life Insurance and Family Takaful Framework, and New Motor Cover Framework.
It also said plans remained on track to gradually abolish motor tariffs from 2016 and move towards a pricing mechanism that is more reflective of risk.
This year, a detailed roadmap which sets out the approach towards full market-based pricing will be announced.
BNM said at 104.4 per cent of Gross Domestic Product (GDP), Malaysia’s debt securities market remained the largest in Southeast Asia.
Malaysia also continued to be a preferred destination for global sukuk issuances, with over 60 per cent of new global issuances worth US$77.9 billion originating from Malaysia in 2014.
The year also saw the first yen-denominated sukuk issued out of Malaysia, and the largest renminbi bond issuance by a Malaysian corporate to date.
The central bank has also continued to be a strong advocate of inclusive financial development.
The number of financial institutions and agents that are part of agent banking networks increased during the year along with an expanded range of services offered through the agent banks.
In three years, the number of sub-districts that have a banking presence has more than doubled to 95 per cent of all 872 sub-districts in Malaysia, from just 46 per cent in 2011, largely due to the presence of agent banks.
Micro enterprises have also continued to be supported with greater access to financing under the Micro Financing Scheme.
Total outstanding financing under this scheme has continued to grow, with RM2.7 billion in financing extended to more than 168,000 micro-enterprise accounts since its inception.
Meanwhile, the Islamic finance industry continued its growth momentum in 2014.
Islamic banking assets grew by 12.0 per cent and now account for 25.6 per cent of total banking system assets.
Foreign currency assets also increased to RM27.7 billion, reflecting the growing importance of cross-border transactions in Islamic finance, BNM said.
The issuance of the Investment Account Framework in 2014, and launch of an Investment Account Platform expected in 2015, will expand the offering of investment accounts as a new Shariah-compliant asset class and source of funding.
Financial integration in the region advanced further with the conclusion of the Sixth Package of Financial Sector Commitments under the ASEAN Framework Agreement on Services.
BNM said together with this package, the ASEAN Banking Integration Framework was finalised, paving the way for deeper regional banking integration.
The central bank has also continued to invest in the development of a sustainable talent pipeline for the financial industry, with the establishment of the Financial Services Talent Council and the Financial Services Professional Board.
This further complements the institutional arrangements for talent development that have been put in place over the years, including the repositioning of the Institute of Bankers Malaysia to form the Asian Institute of Chartered Bankers and establishment of the Asian Banking School. — Bernama
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