Posted on May 7, 2009 - by Gavin

Capital buffer of Malaysian banks strong…

The Star Online

KUALA LUMPUR: The capital buffer of Malaysian banks stands at RM44bil, making the sector “well positioned to absorb any consequences,” said Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz.

This is a further improvement from a buffer level of RM41.9bil at end-February. The capital buffer is roughly the amount of losses the banking system can absorb before capital adequacy regulations are breached.

Speaking to reporters at a roundtable event at the United Nations Advisors Group Asia Regional Forum on Policy and Regulation of Financial Inclusion, the central bank governor also announced that the industry’s risk weighted capital ratio was at 13.4%, up from 13% at end-February and much higher than the 8% minimum requirement.

Zeti had earlier in the day been quoted by Reuters saying Malaysia’s overnight policy rate is at an appropriate level.

“Low interest rates are not constructive,” she told reporters, reiterating that the central bank’s focus is to ensure businesses get access to financing.

Malaysian government bond yields rose after her comments, which followed the central bank’s surprise decision last week to hold interest rates unchanged at 2%, rather than a cut most analysts had expected.

The yield on the benchmark five-year bonds rose six basis points to 3.78%.

At the roundtable event, Zeti said total outstanding microfinance loans in the country had increased to RM1.7bil in 2008 from RM151mil in 2000, representing an annual average growth rate of 35%.

In another measure of financial inclusion in the country, Malaysia now has 10.2 branches for every 100,000 individuals as opposed to the global median of 8.4 branches for every 100,000 individuals, according to Bank Negara.

Source: http://biz.thestar.com.my/news/story.asp?file=/2009/5/7/business/3850311&sec=business