S&P Says Malaysian Banks Expected to Lag Asian Peers in Terms of Recovery

On the 30th of June 2021, Standard and Poor’s Global Ratings (S&P) stated that the recovery of Malaysian banks would take longer than its Asian peers, with normalisation likely extended due to new COVID-19 cases and fresh moratoriums.

Why it Matters?

According to S&P, the Government of Malaysia’s most recent six-month blanket moratorium that was announced on the 28th of June 2021, will prevent the classification of new non-performing loans (NPLs) until early-2022, further distorting the industry’s already under-reported impaired loan ratio.

Details

In Malaysia, the industry-wide NPL ratio is expected to increase to 3-4% by end-2022, according to S&P. Even though the economy shrank by 5.6%...