KUALA LUMPUR, Nov 30 (Bernama) -- Malaysia's net financing growth, excluding development financial institutions (DFIs) and outstanding corporate bonds, continued to support economic activities, increasing to 7.1 per cent in October from seven per cent in September, says Bank Negara Malaysia (BNM).

In its "Monthly Highlights-October 2018" report released today, the central bank attributed the improved growth to an increase in outstanding banking system loans, which rose to six per cent in October from 5.7 per cent in September.

“Business financing remained strong, with a higher total business loan growth of 5.6 per cent in October from 4.5 per cent in September on account of higher growth of loans to non-Small and Medium Entreprises,” it said.

BNM also said the growth in net outstanding issuances of corporate bonds remained healthy at 10.2 per cent in October against 10.8 per cent in September while household loan growth was sustained at 5.9 per cent from 6.0 per cent previously.

The central bank said the domestic financial markets experienced non-resident portfolio outflows in October mainly due to external developments.

“The ringgit depreciated by one per cent amid sustained US dollar strength and non-resident portfolio outflows,” it said, adding that positive sentiment for the US dollar was driven mainly by the releases of positive US economic data and signals by the US Federal Reserve on further planned interest rate increases.

Nevertheless, it said banks in Malaysia maintained sufficient liquidity to support intermediation and meet exigent needs with the banking system liquidity coverage ratio (LCR) standing at 147 per cent and all banks recording LCR levels above 100 per cent.

“Funding profile of the banks was stable. The loan to fund ratio and the loan to fund and equity ratio stood at 83.3 per cent and 72.7 per cent, respectively,” it added.

BNM said the FTSE Bursa Malaysia KLCI also declined 4.7 per cent with sentiment affected by the sharp sell-off in US equities following profit-taking ahead of US earnings announcements and concerns over tighter financing conditions in the corporate sector as reflected by the higher US treasury yields.

However, it said the five-year Malaysian Government Securities’ yield remained stable, increasing by only 4.1 basis points during the month.

-- BERNAMA