PETALING JAYA: Despite the banking sector showing healthy signs such as a brighter outlook with higher loan growth and profitability, gross impaired loans (GIL), however, could still weigh on the sector.
How the asset quality of banks would evolve this year will depend on the duration of the current movement control order (MCO 2.0) that is implemented to curb the pandemic.
Analysts and economists are pencilling in a GIL ratio of 1.76% to 3.5% for this year.
For November last year, GIL ratio stood at 1.53% compared with 1.41% in October the same year.
For December 2019, the ratio stood at 1.53% against 1.48% in December 2018. Although these figures are still relatively manageable compared with 4.8% in December 2008, it still poses a stress on the asset quality of banks.