Are Malaysian banks in for a tough time?

In this article, “Important signs for the market; Banks’ results”, it is clear that banks are extremely important because they allow us to see way in advance if the market is in trouble.

In an article in TheStar, it was reported that Moody’s Investors Service had announced that property loans were the greatest threat to Malaysian banks.

This is despite Bank Negara Malaysia’s stress test finding in September which showed that the Malaysian financial sector would remain resilient.

Moody’s report also questioned the relevance of the Housing and Local Government Ministry’s plan to ease home financing requirements.

According to Starbiz, property experts warned that loosening lending requirements may backfire.

Moody’s said that for Malaysia, the residential segment accounted for over 30% of the domestic banking industry’s gross loans. Malaysia is not alone.

Moody’s also named Australia, New Zealand and South Korea as the top countries in the Asia-Pacific region where property loans posed the greatest threat to domestic banks.

The report also highlighted Malaysia’s residential property prices over the last eight years. In terms of price growth, Malaysia’s ranked fourth, just below Hong Kong, India and the Philippines.

Fortunately for us, property prices cooled down in the first six months of this year.

Are Malaysian banks in for a tough time?

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