Malaysian business loan impairment at 2.8% as SME relief approvals reach RM3.8bn
A one-minute summary read by an AI voice.
Key points
- Bank Negara Malaysia (BNM) put the business loan impairment ratio at 2.8% in June, below the 2022–2025 average of 3.5%.
- Approvals under BNM's SME Stabilisation Relief Facility reached RM3.8bn for more than 6,800 SME accounts by end-September, up from about RM1bn at 25 June 2026.
- BNM noted repayment pressure among SMEs in transportation and storage, wholesale and retail trade, and primary manufacturing.
Implications for lenders
With business impairment at 2.8% but SME repayment pressure in transport, trade and primary manufacturing, lenders may need sector-specific early-warning triggers rather than relying on aggregate ratios. Relief approvals of RM3.8bn can ease borrowers' liquidity, but underwriting may still need to test repayment once relief ends.
Implications
Facts
Asset quality: in its October BNM Insights note, BNM said the business loan impairment ratio of the banking system and development financial institutions stood at 2.8% in June 2026, below the 2022–2025 average of 3.5%. 1 The share of business loans in Stage 2 was 9.8%, below the 2022–2025 average of 13.0%. 2 Outstanding business loans grew 7.3% year on year, above the 2022–2025 average of 4.1%. 3 BNM said repayment pressure had appeared among SMEs in transportation and storage, wholesale and retail trade, and primary manufacturing.
Relief: BNM said on 9 October that financing approved under the SME Stabilisation Relief Facility (SME SRF) reached RM3.8bn as at 30 September, benefiting more than 6,800 SME accounts. 4 It added RM5bn to the facility, on top of the initial RM5bn, 5 which it expects to benefit around 9,000 more SMEs. 6 The facility is available until 30 June 2027 or until fully used.
Analysis
Over time: the business impairment ratio of 2.8% and the Stage 2 share of 9.8% are both below their 2022–2025 averages, while business loan growth of 7.3% is above its average. More recent banking-system data show business loan growth of 8.0% in August. 7 Relief approvals rose from about RM1 bn in late June 8 to RM3.8bn by end-September, showing continued take-up of relief financing even as aggregate impairment stays low.
Across households and businesses: BNM data show household early arrears easing while deeper arrears edge up, and the SME stress BNM describes is concentrated in specific sectors rather than visible in the aggregate business ratio.
| 2026-03 | 5.6 |
|---|---|
| 2026-04 | 5.8 |
| 2026-05 | 6.4 |
| 2026-06 | 6.4 |
| 2026-07 | 6.5 |
| 2026-08 | 6.4 |
BNM credit to the private non-financial sector (outstanding loans plus corporate bonds), y/y at month-end, from BNM Monetary and Financial Developments · Source: Bank Negara Malaysia, Monetary and Financial Developments (monthly) (2026-03, 2026-04, 2026-05, 2026-06, 2026-07, 2026-08) Includes corporate bonds, so it is not bank loan growth alone.
Counterpoints and uncertainties
Impairment ratios lag repayment stress, and relief financing can delay the recognition of problem loans. The June data predate part of the oil-price and cost pressures BNM discusses.
Key figures
- Business loan impairment ratio, June 2026 (BNM): 2.8% (below the 2022–2025 average of 3.5%). Impaired (Stage 3) business loans / total business loans, banking system and DFIs (BNM). Malaysia, banking system and DFIs (BNM). Basis date: 30 Jun 2026. Source: Bank Negara Malaysia: BNM Insights, October 2026 — Beyond Oil Prices
- Business loans in Stage 2, June 2026 (BNM): 9.8% (below the 2022–2025 average of 13.0%). Share of business loans classified Stage 2 (significant increase in credit risk), banking system and DFIs (BNM chart). Malaysia, banking system and DFIs (BNM). Basis date: 30 Jun 2026. Source: Bank Negara Malaysia: BNM Insights, October 2026 — Beyond Oil Prices
- Business loan growth, June 2026 (BNM Insights): 7.3% (above the 2022–2025 average of 4.1%). Year-on-year growth of outstanding business loans, banking system and DFIs (BNM). Malaysia, banking system and DFIs (BNM). Basis date: 30 Jun 2026. Source: Bank Negara Malaysia: BNM Insights, October 2026 — Beyond Oil Prices
- SME SRF financing approved, end-September 2026: RM3.8bn (up from about RM1bn at 25 June 2026). Cumulative financing approved under BNM's SME Stabilisation Relief Facility, as at 30 September 2026. Malaysia, BNM fund. Basis date: 30 Sep 2026. Source: Bank Negara Malaysia: Belanjawan 2027 (press release, 2026-10-09)
June comparison: figures as of 25 June 2026 (about RM1bn for around 1,500 SMEs), Ministry of Finance press citation of 8 July 2026.
- Additional SME SRF allocation: RM5bn (on top of the initial RM5bn). Additional allocation to BNM's SME Stabilisation Relief Facility announced with Budget 2027. Malaysia, BNM fund. Basis date: 9 Oct 2026. Source: Bank Negara Malaysia: Belanjawan 2027 (press release, 2026-10-09)
- Additional SMEs expected from SME SRF top-up: around 9,000. Number of additional SMEs BNM expects the extra SME SRF allocation to benefit. Malaysia, BNM fund. Basis date: 9 Oct 2026. Source: Bank Negara Malaysia: Belanjawan 2027 (press release, 2026-10-09)
- Business loan growth (BNM): 8.0% (up from 7.6% in July). Year-on-year growth of outstanding business loans, banking system. Malaysia, banking system. Basis date: 31 Aug 2026. Source: Bank Negara Malaysia: Monthly Highlights & Statistics, August 2026 (released 2026-09-30)
- SME SRF financing approved (as of 25 June 2026): about RM1 bn. SME SRF financing approved by banks, cumulative, as of 25 June 2026. Malaysia, SMEs affected by the West Asia conflict. Basis date: 25 Jun 2026. Source: MOF: MADANI govt continues working with BNM, banking industry to ensure financial system remains stable (2026-07-08)
Sources
SEA Lending Brief
A weekly summary of lending, credit and regulation across Southeast Asia.
Reports are for information only and are not investment advice.
A Japanese version of this article is available: 日本語版