Malaysia's business loan growth quickens to 8.8% in September; household loans grow 5.3%
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Key points
- Business loan growth rose to 8.8% year on year in September, up from 8.0% in August, while household loan growth was 5.3%, up from 5.2% in August.
- Outstanding loans to the private non-financial sector grew 6.5%, but slower corporate bond growth kept total private credit growth at 6.3%.
- Asset quality held: the gross impaired loans ratio was 1.4% and loan loss coverage rose to 126.0%.
Implications for lenders
Household loan growth of 5.3% with a gross impaired loans ratio of 1.4% suggests banks remain willing to lend to households, so non-bank lenders may face price competition for prime borrowers. Lenders with business or supply-chain products may find more demand as business loan growth reaches 8.8%, but should keep monitoring repayment by sector.
Implications
Facts
Bank Negara Malaysia's Monthly Highlights & Statistics for September, released on 30 October, show credit to the private non-financial sector grew 6.3% year on year, down from 6.4% in August. 1 Outstanding loans grew 6.5%, up from 6.2% in August, 2 while outstanding corporate bonds grew 5.7%, down from 7.1% in August. 3
Business loans grew 8.8%, up from 8.0% in August. 4 Household loans grew 5.3%, up from 5.2% in August. 5
The banking system's gross impaired loans ratio was 1.4% and the net impaired loans ratio 1.0%, both broadly unchanged. 6 7 Loan loss coverage, including regulatory reserves, was 126.0%, up from 125.2% in August. 8 Headline inflation was 1.8%. 9
Analysis
Time series: total private credit growth has stayed in a narrow band since May (chart), but its make-up changed in September. Bank loans accelerated while bond financing slowed, and within bank lending the gain came from businesses: business loan growth moved from 8.0% in August to 8.8%, while household loan growth moved only from 5.2% to 5.3%.
Cross-country: Malaysian loan growth to the private non-financial sector of 6.5%, with household loans at 5.3%, compares with total bank loan growth of 11.4% in the Philippines and bank credit growth of 13.26% in Indonesia in September. 10 11 Malaysia grows from a much larger household debt stock, at 84.8% of GDP at end-2025, so slower growth still adds sizeable leverage. Its impaired loans ratio of 1.4% is well below the Philippine banks' NPL ratio of 3.27%, although the two measures are defined differently.
With inflation at 1.8%, household loan growth remains positive in real terms. Steady impaired ratios and coverage above impaired loans give banks room to keep lending to households, so competition for these borrowers is more likely to be on price and terms than on credit availability.
| 2026-03 | 5.6 |
|---|---|
| 2026-04 | 5.8 |
| 2026-05 | 6.4 |
| 2026-06 | 6.4 |
| 2026-07 | 6.5 |
| 2026-08 | 6.4 |
| 2026-09 | 6.3 |
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, 2026-09) Includes corporate bonds, so it is not bank loan growth alone.
Counterpoints and uncertainties
Monthly growth rates move with base effects, and one month's pick-up in business loans may not persist. The impaired loans ratio is reported to one decimal place, so small changes in asset quality are not visible in the headline. Household loan approvals have fallen in recent months, which may slow household loan growth later.
Key figures
- Credit to the private non-financial sector (BNM): 6.3% (down from 6.4% in August). Year-on-year growth of outstanding loans plus corporate bonds to the private non-financial sector. Malaysia, private non-financial sector. Basis date: 30 Sep 2026. Source: Bank Negara Malaysia: Monthly Highlights & Statistics, September 2026 (released 2026-10-30)
- Outstanding loan growth, private non-financial sector (BNM): 6.5% (up from 6.2% in August). Year-on-year growth of outstanding loans to the private non-financial sector. Malaysia, private non-financial sector. Basis date: 30 Sep 2026. Source: Bank Negara Malaysia: Monthly Highlights & Statistics, September 2026 (released 2026-10-30)
- Outstanding corporate bond growth (BNM): 5.7% (down from 7.1% in August). Year-on-year growth of outstanding corporate bonds of the private non-financial sector. Malaysia, private non-financial sector. Basis date: 30 Sep 2026. Source: Bank Negara Malaysia: Monthly Highlights & Statistics, September 2026 (released 2026-10-30)
- Business loan growth (BNM): 8.8% (up from 8.0% in August). Year-on-year growth of outstanding business loans, banking system. Malaysia, banking system. Basis date: 30 Sep 2026. Source: Bank Negara Malaysia: Monthly Highlights & Statistics, September 2026 (released 2026-10-30)
- Household loan growth (BNM): 5.3% (up from 5.2% in August). Year-on-year growth of outstanding household loans, banking system. Malaysia, banking system. Basis date: 30 Sep 2026. Source: Bank Negara Malaysia: Monthly Highlights & Statistics, September 2026 (released 2026-10-30)
- Gross impaired loans ratio (BNM): 1.4% (broadly unchanged). Gross impaired loans / total loans, banking system. Malaysia, banking system. Basis date: 30 Sep 2026. Source: Bank Negara Malaysia: Monthly Highlights & Statistics, September 2026 (released 2026-10-30)
- Net impaired loans ratio (BNM): 1.0% (broadly unchanged). Net impaired loans / net loans, banking system. Malaysia, banking system. Basis date: 30 Sep 2026. Source: Bank Negara Malaysia: Monthly Highlights & Statistics, September 2026 (released 2026-10-30)
- Loan loss coverage ratio (BNM): 126.0% (up from 125.2% in August). Loan loss provisions including regulatory reserves / gross impaired loans, banking system. Malaysia, banking system. Basis date: 30 Sep 2026. Source: Bank Negara Malaysia: Monthly Highlights & Statistics, September 2026 (released 2026-10-30)
The September release gives August as 125.2%; the August release had shown 125.1%.
- Consumer price inflation, September 2026 (DOSM): 1.8% (down from 1.9% in August). Year-on-year change in the consumer price index (DOSM). Malaysia, national. Basis date: 30 Sep 2026. Source: DOSM: Consumer Price Index, Malaysia, September 2026 (release, 2026-10-19)
- Total loan portfolio, year-on-year growth (T&S calculation): 11.4% (year on year vs September 2025). Year-on-year change in the banking system's total loan portfolio, T&S calculation from reported BSP figures. Philippine banking system. Basis date: 30 Sep 2026. Source: Astig.ph: Bad loans eased to 3.27 percent, but borrowers still owe more than a year ago (2026-10-29, BSP preliminary data)
Preliminary BSP data as reported in the press; BSP may revise them.
- Bank credit growth, September 2026 (BI): 13.26% (down from 13.65% in August). Bank credit, y/y at month-end, as announced by Bank Indonesia after its Board of Governors meeting. Indonesia, national. Basis date: 30 Sep 2026. Source: Bank Indonesia press release No. 28/233/DKom: BI-Rate Tetap 5,75%: Memperkuat Stabilitas, Mendorong Pertumbuhan Ekonomi (2026-10-21)
Sources
SEA Lending Brief
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