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NPLs for RESIDENTIAL properties at 8 year-high. Worrying sign for 2020?

Non-Performing-Loan (NPL) happens when the borrowers fail to repay their borrowings and the banks decided that getting it back voluntarily may not be impossible. They will have to classify these loans as NPLs while at the same time they try to recover them in the near future. NPLs for Malaysian banks have always been on the low side, even by international standard. Do take a look at the image from below. (click to view the full list)

Article in . According to Bank Negara Malaysia’s monthly data, bad loans for the residential properties borrowings have reached RM6.83 billion in October 2019 and this is an 8-year high. The last time it reached higher than this was in 2011 when it reached RM6.91 billion. Fortunately, in comparison to the overall outstanding borrowings of RM1.7 trillion, this remains small. The ratio is just 1.44 percent.

Public Investment Bank Bhd head of research Ching Weng Jin said despite the rise, the NPLs for housing sector should be measured against the total portfolio size and not in isolation. He said, “Back in 2011, the mortgage portfolio was only RM240 billion, and today, it’s slightly under RM600 billion. So, as a percentage of the entire portfolio, the NPLs situation is actually better, so to speak.”

Institute for Democracy and Economic Affairs senior fellow Dr Carmelo Ferlito said, “I think it is good that NPLs remained stably low for so long and it is important to avoid the conditions that may make things worse. If we want to avoid a new cycle, with NPLs skyrocketing again, we should avoid expansionary monetary policy and easy credit. The two things walk together.” Please read the full Article in

It’s super important to understand the real issue and not be alarmed by just any figure. The NPL numbers in Malaysia remains low because BNM is very stringent and our banks have their own lending guidelines which should be a responsible one. Many of these banks are publicly listed and has also to manage the risk versus profit because their shareholders would want a stable and continuous returns too versus extremely high profits one year and then going into the red the year after with lots of provisions for NPLs.

Happy understanding that things are not as bad as what people are saying even if they are not as good as what some property experts are saying when they want you to buy the properties they are selling.

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Header image from shutterstock photo by Andrii Yalanskyi

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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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