Malaysia’s overall loan growth moderated in December 2025, as a slowdown in business borrowing combined with a slight easing in household lending, according to official data released by Bank Negara Malaysia.

Credit to the private non-financial sector expanded by 5.3% in December, easing from 5.5% in November. The figures cover lending to households and non-financial corporations by banks and development financial institutions, as well as corporate bonds issued by non-financial companies, including short-term instruments.

Business Loan Growth Loses Momentum While SME Lending Holds Up

Business loan growth slowed to 3.7% in December from 5% in the previous month, reflecting more cautious borrowing conditions among larger firms.

Bank Negara Malaysia said the moderation was mainly driven by weaker lending to non-small and medium enterprises, while loan growth to small and medium enterprises remained broadly sustained. Despite the slower pace of expansion, overall loan disbursements were higher during the month, indicating that borrowing activity continued even as headline growth softened.

Household Borrowing Eases Slightly At Year-End

Household loan growth edged down to 5.6% in December compared with 5.7% in November, suggesting that borrowing by households remained relatively stable with only a marginal slowdown.

The slight easing may reflect more measured spending and borrowing decisions as the year came to a close, rather than a sharp pullback in demand for credit.

What This Means For Borrowers And Households

For households and businesses, the December data suggests that access to credit remains available, even as borrowing growth begins to slow from recent levels.

The pullback in business loan growth, particularly among larger firms, points to a more cautious approach to expansion and financing, while steady lending to small and medium enterprises indicates that banks are still supporting day-to-day business activity. Higher loan disbursements during the month also suggest that demand for financing has not weakened sharply.

For households, the slight easing in loan growth signals more measured borrowing rather than a sudden shift in behaviour, which may translate into more careful decisions around home purchases, vehicle financing, and other long-term commitments. At the same time, stable asset quality, strong loan loss coverage, and healthy liquidity buffers indicate that banks remain in a position to continue lending, with the December data reflecting moderation rather than stress in the financial system.

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