KUALA LUMPUR: Bank Negara Malaysia said it will continue to closely monitor the "high" household debt levels.
Governor Datuk Abdul Rasheed Ghaffour said as of December 2023, household debt had risen to RM1.53 trillion, a figure deemed high by the central bank.
Nonetheless, he said the situation remains under control due to a low gross impaired loan (GIL) ratio of only 1.6 per cent.
GIL refers to the ratio of banks' non-performing loans to total gross loans.
"We need to monitor household debt levels very closely. Our approach has been to ensure that borrowers understand the impact of borrowing on their ability to repay loans in the future.
"From the borrowers' perspective, we will continue to provide financial education to ensure they understand how to assess their ability to take on loans.
"From a financial stability perspective, the situation remains under control. The level of impaired loans in Malaysia remains low, with the GIL ratio stable at 1.6 per cent," he said at a press conference yesterday.
Prime Minister Datuk Seri Anwar Ibrahim had said in Dewan Rakyat that the household debt rate in the country, in aggregate terms, had shown an increasing trend every year since 2018.
For 2018 to 2023, he said the average annual growth rate of household debt was 5.1 per cent.
Anwar, who is also the finance minister, said this was primarily driven by housing and vehicle loans, following various home ownership incentives offered by the government and private sector.
He noted that the household debt-to-gross domestic product ratio at the end of 2023 increased to 84.2 per cent compared with 82 per cent in 2018.