Moody’s sees Malaysian property market as ‘manageable’

Despite the slowdown in the local property market, the situation is still considered “manageable” for banks and developers, according to Moody’s.

In its report yesterday, Moody’s said the Malaysian banking system was well positioned to weather a soft landing in property prices.

“While delinquencies on mortgages and construction-related loans will likely increase from their current multi-year lows, Malaysian banks have robust capital buffers and healthy pre-provision profitability.

“That said, we consider mortgages with high loan-to-value ratios and loans to overleveraged households and developers to be at risk of payment slippage.”

According to Moody’s, property-related loans accounted for 45% of gross system loans as at November 2014, which was a mild increase from 38% before the 2008 global financial crisis. “Malaysian banks are exposed to the domestic property sector in three main ways - through residential mortgage loans, loans to firms active in the purchase of commercial real estate and loans to construction companies,” it said. - By The Star

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