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					                        SIARAN AKHBAR
Ref. No.: 10/11/05                      EMBARGO: Not for publication or
                                        broadcast before 1700 hours on
                                        Monday, 31 October 2011



         MONETARY AND FINANCIAL DEVELOPMENTS
                    September 2011

Price Conditions: Headline inflation, as measured by the annual percentage
change in the Consumer Price Index (CPI), increased to 3.4% in September.
Higher inflation during the month was due mainly to the food and non-
alcoholic beverages category. The prices of vegetables and fish and seafood
increased following the expiration of the temporary festive season price
control scheme. Inflation in the transport category was lower during the
month, in the absence of further adjustments to the prices of RON95 petrol
and diesel in 2011. The increase in inflation was partly offset by declining
prices in the clothing and footwear and communication categories.


Monetary Conditions: Interbank rates were stable in September. In terms of
retail rates, the average base lending rate (BLR) of commercial banks
remained unchanged at 6.54% as at end of the month. Retail deposit rates
were also stable. The annual growth in broad money (M3) increased to 12.5%
in September and was supported by higher credit extended to the private
sector. Net financing to the private sector increased by RM10.8 billion in
September driven mainly by an increase in outstanding loans, as net private
debt securities (PDS) issuances moderated during the month. The banking
system loans outstanding expanded by 13.8% during the month, with higher
loans extended to businesses in the real estate; transport, storage and
communication; finance, insurance and business services and, wholesale and
retail, restaurants and hotels sectors. Loans to households also continued to
rise steadily, driven mainly by loans for the purchase of residential and non-
residential properties and personal use. Loan demand by businesses and
households moderated during the month.


Banking System: The banking system remained well-capitalised with the
risk-weighted capital ratio (RWCR) and core capital ratio (CCR) at 14.6% and
12.5% respectively. The level of net impaired loans remained stable at 2% of
net loans, while the loan loss coverage ratio was sustained at 95.9%.
Exchange Rates and International Reserves: In September, the ringgit
exhibited a mixed performance against the currencies of Malaysia’s major
trading partners. While the ringgit depreciated against the US dollar,
Japanese yen and Chinese renminbi, it appreciated against the Singapore
dollar and remained unchanged against the euro. The ringgit’s depreciation
against the US dollar was broadly in line with the regional trend, as mounting
concerns over the European sovereign debt crisis and the sustainability of
global economic recovery led to higher risk aversion and prompted some
investors to unwind holdings of emerging market assets. In October, the
ringgit posted a stronger performance against the US dollar as optimism over
possible progress towards resolving the European debt problems gradually
revived demand for emerging market assets. Against other currencies, the
ringgit appreciated against the Japanese yen and Chinese renmimbi, but
depreciated against the euro and Singapore dollar. The international reserves
of Bank Negara Malaysia stood at RM427.9 billion (equivalent to USD134.4
billion) as at 14 October 2011, sufficient to finance 10 months of retained
imports and is 4.6 times the short-term external debt.




Bank Negara Malaysia
31 October 2011




                                 Diterbitkan oleh:
Jabatan Komunikasi Strategik, Tingkat 14, Blok B, Bangunan Bank Negara Malaysia,
                Jalan Dato’ Onn, 50480 Kuala Lumpur, Malaysia.
            Telefon: +60(3) 2698 8044 Faksimili: +60(3) 2693 6919
                              Web: www.bnm.gov.my
Inflation increased in September
                                          Headline Inflation                                                                                        Headline Inflation: Component Contribution

   YoY%                                                                                                                                             % points
                                              Headline CPI
    20                                                                                                                                              1.6
                                              Food and non-alcoholic                                                                                                                                 August              September
    15                                        beverages                                                                                             1.4
                                              Transport
    10                                                                                                                                              1.2

                                                                                                                                                    1.0
     5
                                                                                                                                                    0.8
     0
                                                                                                                                                    0.6
    -5
                                                                                                                                                    0.4
   -10
                                                                                                                                                    0.2
   -15
                                                                                                                                                    0.0




                                                                                                                                                                                                        Housing and



                                                                                                                                                                                                                          Restaurant



                                                                                                                                                                                                                                               Others
                                                                                                                                                              alcoholic bev
                                                                                                                                                               Food, Non-




                                                                                                                                                                                                                          and Hotels
   -20




                                                                                                                                                                                        Transport



                                                                                                                                                                                                          Utilities
                           Dec 09




                                                                                           Dec 10
                                         Mar 10

                                                           Jun 10




                                                                                                        Mar 11

                                                                                                                          Jun 11
         Sep 09




                                                                         Sep 10




                                                                                                                                       Sep 11




                                                                                                                                                    *Others include recreation services and culture; alcoholic
                                                                                                                                                     beverages and tobacco; education; health; furnishings;
                                                                                                                                                     household equipment and routine; communication
                                                                                                                                                     clothing and footwear, and miscellaneous goods and
                                                                                                                                                     services

     Source: Department of Statistics Malaysia                                                                                                      Source: Bank Negara Malaysia




Interest rates remained stable
                  Average Overnight Interbank Rate                                                                                                                      Average Interbank Rates
     %
                                                                                                                                                     %
    3.5                                                                                              28 Oct: 2.99%                                   4.0
                      Ceiling rate of the                                                                                                                                                           1-week
                      corridor for the OPR
    3.0                                                                                                                                                                                             1-Month
                                                                                                                                                     3.5
                                                                                                                                                                                                    3-Month                                         3.27
    2.5                                                                                                                                                                                                                                             3.06
                                                                                                                                                     3.0
                                                                                                                                                                                                                                                    3.01

    2.0                                                                                                                                              2.5
                                     Floor rate of the corridor
                                           for the OPR
    1.5                                                                                                                                              2.0


    1.0                                                                                                                                              1.5
                                     Apr 10




                                                                     Oct 10




                                                                                                     Apr 11




                                                                                                                                    Oct 11
                  Dec 09




                                                            Aug 10


                                                                                  Dec 10




                                                                                                                           Aug 11
                                                  Jun 10




                                                                                                                 Jun 11
                            Mar 10




                                                                                            Feb 11




                                                                                                                                                           Sep 09




                                                                                                                                                                                                      Sep 10




                                                                                                                                                                                                                                           Sep 11
                                                                                                                                                                      Dec 09




                                                                                                                                                                                                                Dec 10
                                                                                                                                                                                           Jun 10




                                                                                                                                                                                                                                  Jun 11
                                                                                                                                                                               Mar 10




                                                                                                                                                                                                                         Mar 11




     Source: Bank Negara Malaysia                                                                                                                   Source: Bank Negara Malaysia




                                                                                                                                                1
           Deposit Rates of Commercial Banks                                                                                                    Lending Rates of Commercial Banks
    %                                                                                                                                     %
    3.6                                     3M FD rate                                                                                    7.3

    3.2                                                                                                               3.00                                                             Base Lending Rate
                                            Savings Rate                                                                                  6.8                                          Average Lending Rate
    2.8                                                                                                                                                                                                                                               6.54

    2.4                                                                                                                                   6.3

    2.0
                                                                                                                                          5.8
    1.6
                                                                                                                      1.03
    1.2                                                                                                                                   5.3                                                                                                         5.05
    0.8
                                                                                                                                          4.8
    0.4

    0.0
                                                                                                                                          4.3
              Sep 09

                                 Jan 10




                                                                     Sep 10

                                                                                        Jan 11




                                                                                                                            Sep 11
                                                   May 10




                                                                                                          May 11




                                                                                                                                                Sep 09




                                                                                                                                                                                                   Sep 10




                                                                                                                                                                                                                                                        Sep 11
                                                                                                                                                                   Jan 10




                                                                                                                                                                                                                  Jan 11
                                                                                                                                                                                 May 10




                                                                                                                                                                                                                                    May 11
                                                                                                                                         Source: Bank Negara Malaysia
    Source: Bank Negara Malaysia


Liquidity in the banking system remained ample


                         Loan-Deposit Ratio and                                                                                                                   Outstanding Liquidity Placed
                         Financing-Deposit Ratio                                                                                                                   With Bank Negara Malaysia
    %                                 Loan-Deposit Ratio of                                                                 %             RM bil
                                                                                                                                                                     Others
    95                                Banking System                                                                        91             400
                                      Financing-Deposit Ratio (Incl.                                                                                                 Repo
    93                                                                                                                                     360
                                      Investment in PDS) (RHS)                                                              90
    91                                                                                                                                                               BNM Debt securities
                                                                                                                                           320
    89                                                                                                                      89                                       Direct Borrowing and Wadiah
                                                                                                                                                                     Acceptance
    87                                                                                                                                     280
                                                                                                                            88
    85                                                                                                    87.9
                                                                                                                                           240
                                                                                                                                                                                                    `
                                                                                                                            87
    83
                                                                                                                                           200
    81                                                                                                                      86
                                                                                                          81.9
    79                                                                                                                                     160
                                                                                                                            85
    77                                                                                                                                     120
                                                                                                                                                                                          Jun 10




                                                                                                                                                                                                                                             Jun 11
                                                                                                                                                                              Mar 10




                                                                                                                                                                                                                           Mar 11
                                                                                                                                                         Sep 09

                                                                                                                                                                     Dec 09




                                                                                                                                                                                                        Sep 10

                                                                                                                                                                                                                 Dec 10




                                                                                                                                                                                                                                                        Sep 11




    75                                                                                                                      84
                       J an 10


                                          May 10




                                                                              J an 11


                                                                                                 May 11
         Sep 09




                                                            Sep 10




                                                                                                                   Sep 11




    Source: Bank Negara Malaysia                                                                                                         Source: Bank Negara Malaysia




                                                                                                                                     2
Broad money growth increased



                                                     M1 and M3                                                                                                      Main Contributors of M3 Growth
       Annual                                                                                                                                         %
       Grow th                                                                                                                                                                 Other influences
                                                                                                                                                       25                      Net foreign assets
         (%)
       19                                                                                                                                                                      Claims on private sector
                                                                                                                                                       20                      Net claim on Govt
       17                                                                                                                                              15

       15                                                                                                                    M1:                       10
                                                                                                                            13.3%
       13                                                                                                                                                 5
                                                                                                                             M3:
       11                                                                                                                   12.5%                         0

        9                                                                                                                                              -5

        7                                                                                                                                             -10

        5                                                                                                                                             -15




                                                                                                                                                                             Dec 09

                                                                                                                                                                                            Mar 10

                                                                                                                                                                                                          Jun 10



                                                                                                                                                                                                                             Dec 10

                                                                                                                                                                                                                                           Mar 11

                                                                                                                                                                                                                                                         Jun 11
                                                                                                                                                                Sep 09




                                                                                                                                                                                                                    Sep 10




                                                                                                                                                                                                                                                                      Sep 11
                                     Mar 10

                                                  Jun 10




                                                                                            Mar 11
                       Dec 09




                                                                          Dec 10



                                                                                                        Jun 11
            Sep 09




                                                             Sep 10




                                                                                                                   Sep 11




       Source: Bank Negara Malaysia                                                                                                               Source: Bank Negara Malaysia



Financing activity remained strong in September


                     Net Financing and Loan Growth                                                                                                    Loans Outstanding of the Banking System
       YoY %
       15                                                                                                                                             YoY %                                                                                                       YoY%
                                              To tal Net Financing                                                                                    16                                                                                                             15
                                                                                                                                                                                                B usinesses
       14                                     To tal Lo an Gro wth                                                               13.8
                                                                                                                                                      14                                        Ho useho lds (RHS)                                                   14.0
                                                                                                                                                                                                                                                                       14
       13                                                                                                                        13.4
                                                                                                                                                      12
       12                                                                                                                                                                                                                                                                   13

       11                                                                                                                                             10                                                                                                             12.5
                                                                                                                                                                                                                                                                       12
       10                                                                                                                                              8
                                                                                                                                                                                                                                                                            11
        9                                                                                                                                              6

        8                                                                                                                                                                                                                                                                   10
                                                                                                                                                       4
        7                                                                                                                                                                                                                                                                   9
                                                                                                                                                       2
        6
                                                                                                                                                       0                                                                                                                    8
                     Nov 09
                                Jan 10
                                         Mar 10
                                                   May 10
                                                            Jul 10


                                                                                   Nov 10
                                                                                               Jan 11
                                                                                                        Mar 11
                                                                                                                 May 11
                                                                                                                            Jul 11
            Sep 09




                                                                      Sep 10




                                                                                                                                     Sep 11




                                                                                                                                                                    Nov 09
                                                                                                                                                                             J an 10
                                                                                                                                                                                       Mar 10
                                                                                                                                                                                                 May 10
                                                                                                                                                                                                          Jul 10

                                                                                                                                                                                                                   Nov 10
                                                                                                                                                                                                                             J an 11
                                                                                                                                                                                                                                       Mar 11
                                                                                                                                                                                                                                                May 11
                                                                                                                                                                                                                                                         Jul 11
                                                                                                                                                                                                                   Sep 10




                                                                                                                                                                                                                                                                   Sep 11
                                                                                                                                                           Sep 09




* Net financing comprises of banking system loans and private
debt securities (PDS) outstanding (excluding non-residents and
Cagamas)
         Source: Bank Negara Malaysia                                                                                                             Source: Bank Negara Malaysia




                                                                                                                                              3
                   Gross Private Sector Financing                                                                                  Loan Disbursements by the Banking System

     RM bil                            Equity                                                                                       RM bil
     90                                Gro ss P DS*                                                                                80                       B usinesses

                                       Lo an disbursements                                                                                                  Ho useho lds
     80                                                                                                                            70

     70                                                                                                                            60

                                                                                                                                   50
     60
                                                                                                                                   40
     50
                                                                                                                                   30
     40
                                                                                                                                   20

     30                                                                                                                            10

     20                                                                                                                             0
                                     Mar 10
                                              May 10
                                                       Jul 10




                                                                                           Mar 11
                                                                                                    May 11
                                                                                                             Jul 11




                                                                                                                                                                    Jan 10
                                                                                                                                                                                Mar 10
                                                                                                                                                                                            May 10
                                                                                                                                                                                                        Jul 10



                                                                                                                                                                                                                                         Jan 11
                                                                                                                                                                                                                                                   Mar 11
                                                                                                                                                                                                                                                             May 11
                   Nov 09
                            Jan 10




                                                                         Nov 10
                                                                                  Jan 11




                                                                                                                                                        Nov 09




                                                                                                                                                                                                                              Nov 10




                                                                                                                                                                                                                                                                       Jul 11
          Sep 09




                                                                Sep 10




                                                                                                                      Sep 11




                                                                                                                                            Sep 09




                                                                                                                                                                                                                   Sep 10




                                                                                                                                                                                                                                                                                  Sep 11
* Excludes foreign issuances
      Source: Bank Negara Malaysia                                                                                                 Source: Bank Negara Malaysia




     Loan Applications with the Banking System                                                                                          Loan Approvals by the Banking System

     RM bil                                                                                                                         RM bil
     80                                                                                                                             45
                       B usinesses                                                                                                                               B usinesses
     70                Ho useho lds
                                                                                                                                    40                           Ho useho lds

     60                                                                                                                             35

                                                                                                                                    30
     50
                                                                                                                                    25
     40
                                                                                                                                    20
     30
                                                                                                                                    15
     20
                                                                                                                                    10
     10                                                                                                                                 5

      0                                                                                                                                 0
                            Jan 10
                                     Mar 10
                                              May 10
                                                       Jul 10



                                                                                  Jan 11
                                                                                           Mar 11
                                                                                                    May 11
                   Nov 09




                                                                         Nov 10




                                                                                                             Jul 11
          Sep 09




                                                                Sep 10




                                                                                                                      Sep 11




                                                                                                                                                           Nov 09
                                                                                                                                                                       Jan 10
                                                                                                                                                                                   Mar 10
                                                                                                                                                                                               May 10
                                                                                                                                                                                                          Jul 10


                                                                                                                                                                                                                                Nov 10
                                                                                                                                                                                                                                          Jan 11
                                                                                                                                                                                                                                                    Mar 11
                                                                                                                                                                                                                                                              May 11
                                                                                                                                                                                                                                                                         Jul 11
                                                                                                                                               Sep 09




                                                                                                                                                                                                                     Sep 10




                                                                                                                                                                                                                                                                                   Sep 11




      Source: Bank Negara Malaysia                                                                                                 Source: Bank Negara Malaysia




                                                                                                                               4
Banking system capitalisation remained strong with stable loan quality


                                         Capital Strength                                                                             Net Impaired Loans Ratio and Loan Loss Coverage
                                                                                                                                            %                                                                                                                        %
     %
                                                                                                                                            4                                                                                                                              110
     16

     15                                                                                                           14.6
                                                                                                                                                                                                                                                     95.9 100
                                                                                                                                            3
     14
                                                                                                                                                                                                                                                                           90
     13
                                                                                                                  12.5

     12                                                                                                                                     2                                                                                                                              80
                                                                                                                                                                                                                                                         2.0
     11
                                                                                                                                                                                                                                                                           70
     10                                                                                                                                     1                                             Net Impaired Loans Ratio
                                                                            RWCR                                                                                                                                                                     1
                                                                                                                                                                                                                                                                           60
      9                                                                     Core Capital Ratio                                                                                            Loan Loss Coverage
                                                                                                                                                                                          (RHS)
      8                                                                                                                                     0                                                                                                                              50




                                                                                                                                                           Nov 09
                                                                                                                                                                    Jan 10
                                                                                                                                                                    Mar 10
                                                                                                                                                                                      May 10
                                                                                                                                                                                               Jul 10

                                                                                                                                                                                                         Nov 10
                                                                                                                                                                                                                          Jan 11
                                                                                                                                                                                                                                   Mar 11
                                                                                                                                                                                                                                               May 11
                                                                                                                                                                                                                                                Jul 11
                    Nov 09
                             Jan 10
                                      Mar 10
                                               May 10
                                                        Jul 10




                                                                                             Mar 11
                                                                                                      May 11
                                                                           Nov 10
                                                                                    Jan 11



                                                                                                               Jul 11




                                                                                                                                                Sep 09




                                                                                                                                                                                                         Sep 10




                                                                                                                                                                                                                                                                  Sep 11
          Sept 09




                                                                 Sept 10




                                                                                                                        Sept 11




                                                                                                                                      * Beginning January 2010, loans are reported based on
                                                                                                                                         FRS139. The adoption of FRS139 requirement is based on
                                                                                                                                         the financial year of the banks.
                                                                                                                                      1
                                                                                                                                        Refers to ratio of general provisions/collective impairment
                                                                                                                                         provisions to total net loans.
      Source: Bank Negara Malaysia                                                                                                    Source: Bank Negara Malaysia


Mixed performance of the ringgit against major trading partners

                     Index of Ringgit Performance
                                                                                                                                                                    Net International Reserves
                     against Major Trade Partners*
                                                                                                                                            USD bil                                                                                                       Months /
     Index (Dec 08 = 100)
                                                                                                                                                                                         Net intl reserves (LHS)                                           Times
     112                                                                                                                                   150
                                                                                                                                                                                         Ret ained import cover
                                                                                                                                                                                                                                                                             14
     110                                                                                                                                   140                                           Reserves/ST ext debt


     108                                                                                                                                   130                                                                                                                               12
                                                                                                                                                                                                                                   14 Oct:
                                                                                                                                                                                                                                   USD134.4bn
     106                                                                                                                                   120                                                                                                                               10

     104                                                                                                                                   110
                                                                                                                                                                                                                                   10 m onths                                8
     102                                                                                                                                   100
                                                                                                                                                                                                                                                                             6
     100                                                                                                                                    90
                                                                                                                                                                                                                                                                             4
       98                                                                  MYR appreciation                                                 80
                                                                                                                                                                                                                                   4.6 tim es
       96                                                                                                                                   70                                                                                                                               2
                                                                                                                                                         Jul 09
                                                                                                                                                                    Oct 09

                                                                                                                                                                             Jan 10


                                                                                                                                                                                                        Jul 10
                                                                                                                                                                                                                 Oct 10

                                                                                                                                                                                                                              Jan 11


                                                                                                                                                                                                                                                         Jul 11
                                                                                                                                                                                                                                                                    14 Oct
                                                                                                                                                                                           Apr 10




                                                                                                                                                                                                                                            Apr 11
                    Apr 09


                    Oct 09


                    Apr 10




                    Apr 11
                    Oct 10




                    Oct 11
                    Dec 08



                    Aug 09

                    Dec 09



                    Aug 10

                    Dec 10



                    Aug 11
                    Jun 09




                    Jun 10




                    Jun 11
                    Mar 09




                    Feb 10




                    Feb 11




                                                                                                                                            Source: Bank Negara Malaysia
  * Currencies in the index: USD, CNY, SGD, JPY, EUR
    Each currency carries equal weight
      Source: Bank Negara Malaysia                                                                                                    Source: Bank Negara Malaysia




                                                                                                                                  5
                                                       Key Monetary and Financial Statistics
                                                                                     Jul 11                              Aug 11                     Sep 11

                                                                            O/stg          Ann. growth          O/stg        Ann. growth    O/stg        Ann. growth

                                                                           (RM bil)            (%)          (RM bil)              (%)      (RM bil)           (%)
Monetary Aggregates
Reserve money                                                                87.9              56.8              95.3             58.1      88.1              53.0
M1                                                                          235.5              14.5             243.9             13.7      241.9             13.3
M2                                                                         1,127.9             11.6             1,133.6           10.8     1,163.1            13.0
M3                                                                         1,156.4             11.6             1,160.5           10.6     1,187.8            12.5
Banking System
Net financing1                                                             1,263.8             12.6             1,282.1           13.4     1,292.9            13.4
Loan-deposit ratio (%) 2                                                              82.2                                82.9                        81.9
Financing-deposit ratio (%) 2&3                                                       88.3                                89.2                        87.9
Loans applied (during the period)                                            65.3              8.5               60.8             -2.9      56.8              6.1
Loans approved (during the period)                                           32.3              5.1               34.6             10.0      31.4              8.0
Loans disbursed (during the period)                                          64.0              7.5               69.7             23.0      68.3              14.1
Loans repaid (during the period)                                             63.6              11.8              61.9             17.3      62.6              12.9
Banking System Health
Risk-weighted Capital Ratio (RWCR) (%)                                                14.5                                14.8                        14.6
Net Impaired Loans Ratio (%)                                                             2.0                               2.0                         2.0
BNM International Reserves (end-period)
Net Reserves in RM billion                                                            409.5                               412.1                       417.1
Net Reserves in USD billion (equivalent)                                              135.4                               136.3                       131.0
Months of retained imports                                                               9.6                               9.6                         9.7
Interest Rates at end-period [average for the month]
Overnight Policy Rate (OPR)                                                           3.00                                3.00                        3.00
Interbank:                                             Overnight                    2.98 [2.93]                         2.99 [2.97]                2.99 [2.98]
                                                       1-week                       3.01 [3.01]                         3.01 [3.01]                3.02 [3.01]
                                                       1-month                      3.05 [3.05]                         3.05 [3.05]                3.09 [3.06]
Fixed deposits of commercial banks:                    1-month                        2.95                                2.96                        2.95
                                                       3-month                        3.00                                3.01                        3.00
BLR of commercial banks                                                               6.54                                6.54                        6.54
ALR of commercial banks                                                               5.03                                5.05                        5.05
Prices
Consumer Price Index (CPI) (2010=100)                                       103.4              3.4              103.6             3.3       103.8             3.4


1   Comprises of banking system loans outstanding and private debt securities (PDS) outstanding (excludes non-resident and Cagamas)
2   Excludes transactions by financial institutions.
3   Refers to the ratio of loans and holdings of PDS by the banking system to deposits of the banking system.




Source: Bank Negara Malaysia and Department of Statistics Malaysia




                                                                                     6

				
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