Banks weather Middle East shock with asset quality intact

Malaysia's banking sector has maintained its asset quality despite the economic impact of the Middle East conflict, according to RHB Research. The main transmission channels to the banking sector were through the real economy and global financial markets, rather than direct bank exposures, according to Bank Negara Malaysia's recent assessment.

Business and system impairment ratios remained steady at 2.8% and 1.4%, respectively, and stage 2 loans have eased, while household borrowers have remained resilient. The banking sector could withstand higher bond yields, although a 100-basis-point rise could reduce the sector's CET-1 ratio by about 46 basis points after mitigation measures.

Brief written by urgent.news from New Straits Times's own syndicated text. Machine-written — may contain errors; check the original before relying on it.