Banks were not spared in this current crisis. Aggregate earnings of all listed banks on Bursa Malaysia fell 30% y-o-y in 1H2020 — dragged down by higher aggregate allowances for impaired loans and one-off modification losses.
Last week, we highlighted the latest statistics showing that financial positions for Malaysian households and domestic consumption remain resi lient in the face of the deep shock to the economy brought about by the Covid-19 pandemic.
This week, we continue the series by looking at the domestic banking system, which is the lifeblood of any economy. Finan cial institutions are often the most vulnerable segment during a crisis when liquidity drops, demand for loans dries up and impairments rise. In the worst-case scenario, banks can turn insolvent and create systemic risk to the broader economy.
