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Gross impaired loans has grown 3.6% in October. Bad?

Malaysia’s gross impaired loans has growth 3.6% in October.

When we get ourselves a loan, we need to continue paying for it every month. Moratorium meant that we could stop paying but once it’s over, we need to restart the payment. Non-Performing Loan (NPL) is when borrowers fail to pay their loans for 3 months. Briefly, these are considered bad debts. Impaired loans means there is a possibility that the loan will become a NPL. Briefly, this is not NPL yet. There is still a chance that the borrower will be able to pay. Let’s look at the Malaysian banking system’s health.

gross impaired loans
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Article in Bank Negara Malaysia (BNM) says that the banking system’s asset quality remains healthy post-blanket loan moratorium. It said that overall gross impaired loans ratio edged higher to 1.43 per cent in October (September: 1.38 per cent).

It highlighted in its Monthly Highlights – October 2020 report, “Total provisions grew by 5.54 per cent for the month of October compared to 7.44 per cent in September as banks continue to set aside additional provisions against future credit losses.”

It noted that banks continued to restructure and reschedule loans of viable borrowers who might still face challenges servicing their loans. Outstanding loans continued to expand (4.3 per cent in October versus 4.4 per cent in September), supported by household loans. Do read the full report here yeah. Article in

How are we doing?

It’s important that we also keep our financial health in check. First things first would be expenses. There is really no need to buy something expensive if there are cheaper alternatives. Top end handphones could be had RM200 per month for 24 months and we think it’s cheap but it’s far cheaper to just get a RM799 phone instead. You have just saved RM4,000 over 2 years which will come in handy during rainy days. Earlier article for your reference here: It is in this order, which stage are you?

Secondly, do not be greedy and do not be cheated by scams. There’s just too many of them around and we would only be cheated either because we are not aware or because we were greedy. You have just read this article. Please beware because Malaysians lost RM256 million due to scams. Earlier article here: Malaysians scammed RM256 million If you care, do tell more people about this especially the elderly too.

Last but not least would be to understand that there’s a huge difference between gross impaired loan which is looking like it’s going bad versus non-performing loan which is already bad at the point in time. Given time, both could be resuscitated but in the meantime, BNM just have to be very vigilant so that the banking industry continue to have a healthy. Keep the gross impaired loans to a minimum. It is only when they are healthy that they could continue lending and help the recovery growth. Want to read about banks and their profits and dividend? Click here. It’s really not bad at all.

Happy understanding.

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Charles Tan The Founder The Writer Kopiandproperty
Charles Tan

Charles is Founder of He writes from his investment experience for the the past 20 years in investments including property, stock, unit trust and more as well as readings and conversations with many property gurus in the industry. is an independent property blog which is not affiliated to any media company, property developer or even real estate agencies.

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