Bank Negara may leave rates unchanged for rest of year 13 Aug 2013 PETALING JAYA: Bank Negara is expected to maintain the overnight policy rate (OPR) for the rest of this year but a possible 25 to 50 basis points hike is anticipated for next year which could result in a “one-time lift” to the earnings of banks. CIMB Research told this to its clients last Friday via a report, adding that every 25 basis point hike would lift banks’ net profit by 1.2% due to a re-pricing gap between lending and deposit rates. “While rate hikes could provide a one-time lift to earnings, continuous pressure on margins from rate competition remains a concern,” it said. It is keeping a “neutral” call on the banking sector for now. It added that rate hikes, which mean a rise in cost of funds, would drag down the industry’s loan growth though the impact should not be significant due to the small magnitude of increase. A rate hike could reduce 2014’s loan growth by 40 to 80 basis points from 10% to 11% to about 9% to 10.5%. Bank Negara has maintained the OPR at 3% in its recent meeting. The central bank has kept the OPR at 3% since May 2011. Its next monetary policy meeting is scheduled for Sept 5. - the star online
Posted on: Tue, 13 Aug 2013 07:37:18 +0000
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