Malaysian banks' absolute gross impaired loans up 7.1% in May

The banks' asset quality is still deteriorating.

Absolute gross impaired loans (GIL) rose 7.1% YoY in May 2017 (+9.7% YoY in Apr 2017), while the overall GIL ratio rose marginally to 1.67% from 1.66% in Apr 2017 (versus a low of 1.56% in Apr 2015), says Maybank Kim Eng. Loan loss coverage dropped to 83% from 88.9% end-Apr 2017.

Here's more from Maybank Kim Eng:

Residential property absolute GIL rose 6.8% YoY but the GIL ratio continues to improve and was just 1.11% end-May 2017. Absolute GIL for personal loans rose 17.5% YoY but the overall ratio continues to be stable at 2.22%.

Meanwhile, absolute auto GIL continued to contract and the GIL ratio continues to be low at 0.89%.

What requires to be monitored would be asset quality in the non-residential property space, whereby absolute GILs are rising at a double-digit pace (+18.7% YoY in May 2017) and the GIL ratio has since risen to 1.15% from a low of 0.67% in May 2014.

Working capital GILs are also on the rise and the ratio is now slightly higher at 2.46% from a low of 2.25% in Jan 2016.