Malaysian banks have emerged stronger and more resilient, the national recapitalisation agency said today as it announced it has fully redeemed its RM11 billion bonds issued five years ago to prop up ailing banks.

The five-year zero-coupon unsecured redeemable bond, which matures today, was issued by Danamodal Nasional Bhd. in 1998 to fund the recapitalisation of banking institutions affected by the Asian financial crisis.

In a statement, Danamodal said it has injected a total of RM7.59 billion into 10 banking institutions.

Eight of those banks have fully repaid RM5.91 billion that was injected while the remaining RM1.68 billion invested in two banks is expected to be fully recovered early next year, it said.

Bank mergers

Local institutions have become "stronger and more resilient," with the risk-weighted capital ratio of the banking system strengthening to 13.50 percent as at end-August, compared with the pre-crisis level of 10.50 percent, it said.

The net non-performing loan ratio has also improved to 6.50 percent at end-August, and the banking system recorded a higher rate of return on assets and equity of 1.3 and 16.8 percent respectively last year, it added.

A sweeping programme two years ago merged Malaysia's 54 banks and finance houses into 10 groups and the central bank envisages a second wave of consolidation to leave between six and eight banks ahead of market liberalisation in 2007. - AFP