Banks to step up fee-based business due to narrowing margins

Teoh: ‘Some banks may sacrifice profit/interest margins to maintain market share and absolute profit growth.’

PETALING JAYA: The margin of banks, which has been continuously compressed, may further narrow this year spurring banks to step up their non-interest income or fee-based business in line with the stricter requirement to hold a higher percentage of quality liquid assets next year.

Under the Basel III liquidity coverage ratio (LCR), banks are required to maintain a certain percentage of next 30 days cash outflow in high quality liquid assets targeted at 80% next year from 70% this year. By 2019, the LCR would be increased to 100%. High quality liquid assets include cash and marketable securities.