[ad_1]
KUALA LUMPUR (Oct 14): Bank Negara Malaysia (BNM) said today that the actual impact of the Covid-19 pandemic on banks will be subject to uncertainty and that the solvency of financial service providers over the next 12 to 18 months It will depend on multiple factors, including the pace of the Malaysian and regional economic recovery, as well as initiatives taken by financial institutions to support viable borrowers.
BNM said in its Financial Stability Review for the first half of 2020 that the real impact of the Covid-19 pandemic on the solvency of banks will also depend on the movement of banks to shore up capital buffers in addition to additional political intervention to support economic recovery.
“The actual impact on banks’ capital strength over the next 12-18 months will be subject to some degree of uncertainty.
“While banks can be expected to be more cautious given continued uncertainties and prospects for a longer recovery, it is in the collective interest of the banking industry to continue to support viable businesses and homes during this period.
“The capital buffers accumulated over the years are intended to support loans in times of stress and therefore can be used. Furthermore, these buffers are vital for banks to remain resilient and reduce risk aversion This will be essential to avoid further repercussions on economic growth and prospects for recovery, which in turn will cause much greater losses for banks, ”said BNM.
Read also:
Banks credit costs will increase to RM29b in 2020, 2021
Bank profits fall in 1H20 due to margin compression and higher provisions: central bank
To see more stories from BNM Financial Stability Review, click here.
[ad_2]
