KUALA LUMPUR: The median debt service ratios (DSRs) for newly-approved and outstanding household loans have been stable as banks in Malaysia continued to observe sound lending standards.
In its Financial Stability Review for Second Half 2023 (FSR 2H23), Bank Negara Malaysia said improving income and employment conditions continue to preserve household resilience and measures of debt repayment capacity remained healthy.
The household borrowings that may be at higher risk of default increased slightly to 4.8 per cent of total household loans as at December last year (June 2023: 4.3 per cent).
This remains within banks' expectations and is about 40 per cent lower in value terms than at the height of the pandemic, said the central bank.
Households facing repayment difficulties were contained to a small segment of borrowers with pre-existing financial vulnerabilities and are more constrained in their ability to adjust to higher costs of living.
Help for these borrowers remains in place through the services of the Credit Counselling and Debt Management Agency (AKPK).
Enrolments into AKPK's Debt Management Programme (DMP) increased notably in 2023 in tandem with a higher level of awareness among borrowers of its services.
"However, household borrowings managed under the DMP remain very small at 0.54 per cent of total household loans from banks and development financial institutions," said Bank Negara.