Bank Negara Malaysia (BNM) informed that the real impact of the Covid-19 pandemic on banks is subject to the ability to pay the debt of financial services providers in the next 12 to 18 months, depending on several factors.
Among the factors involved are the recovery rate of the Malaysian and regional economies as well as initiatives taken by financial institutions to assist eligible borrowers.
According to BNM through the Financial Stability Survey for the first half of 2020, the real impact of the Covid-19 pandemic on banks' ability to repay debts also depends on the bank's move to raise capital buffers as well as additional policy intervention to support economic recovery.
The report added that the real impact on the strength of the bank's capital in the next 12-18 months is subject to a certain level of uncertainty.
“While banks are expected to be more cautious based on uncertainty and uncertain recovery prospects, it is important for the banking industry to support eligible businesses and households during this difficult period.
“The capital buffer developed over the years is intended to support the form of loans during difficult and usable periods.
"In fact, such a buffer is important for banks to stay strong. This is important to curb the greater impact on economic growth and the prospect of recovery which in turn will result in higher losses to banks, ”according to BNM.
