KUALA LUMPUR, Malaysia � Malaysian banks achieved higher loan growth in June 2017, driven by approvals to businesses, says Bank Negara Malaysia (BNM).(BNM is Malaysia’s central bank)

In a statement today, the central bank said outstanding loans increased to 5.7 per cent in June compared with 5.5 per cent in the previous month.

The improvement in business loan growth was due to higher growth in loans extended to businesses other than small and medium enterprises (SMEs), registering 6.3 per cent in June from 4.1 per cent in May, said BNM in the June 2017 Monthly Highlights statement.

The loans were mainly given to businesses in major sectors such as construction, manufacturing, wholesale and retail trade, restaurants and hotels.

Asset quality of the banking system remained sound, as the level of impaired loans remained stable at 1.2 per cent of total loans net of individual impairment provisions.

Taking into account regulatory reserves for loans and financing, all banks maintained a sufficient buffer for potential credit losses, with the loan loss coverage ratio currently at 83.2 per cent, it said.

BNM also said headline inflation declined to 3.6 per cent in June 2017, compared to 3.9 per cent in May.

It said the decline was mainly due to lower fuel prices during the month, as prices of RON95 petrol averaged at RM2.00 per litre in June compared to RM2.09 per litre in May.

This was the third consecutive month of decline in headline inflation, from its peak of 5.1 per cent in March. The average inflation rate in the first half of 2017 was 4.1 per cent, said BNM.

Meanwhile, the overall industrial production index (IPI) in May grew by 4.6 per cent compared to 4.2 per cent in April, driven by an expansion in manufacturing and electricity production.

The central bank attributed the improved performance of the manufacturing sector of 7.3 per cent in May (April: 6.7 per cent) to both the export- and domestic-oriented industries.