KUALA LUMPUR: CIMB Equities Research expects Maybank, Public Bank and Hong Leong Bank to benefit from the 25 basis points hike in the overnight policy rate (OPR) which was increased to 3.25%.
It said on Friday the higher OPR, announced by Bank Negara Malaysia’s monetary policy committee the previous day, would lift their net profits by 1% to 2%.
However, the hike in the OPR would be “neutral for AMMB and Affin”.
“BIMB would be the only casualty of the hike due to its high percentage of fixed-rate loans, which would not be re-priced upward in the event of a rate hike. We think that every 25bps increase in OPR would trim its net profit by about 2.4%,” it said.
CIMB Research said based on its simulation, it estimated that a 25bps hike in OPR would enhance the banks’ net profit by about 1%, assuming a 25bp rise in base lending rate and an average of 20bps in fixed deposit rates.
“The biggest beneficiary would be Alliance, which could see a potential positive impact of +2.8% in net profit for every 25bp hike in OPR, thanks to its high proportions for floating-rate loans (89.4%) and low-cost deposits (33.4%),” it said.
CIMB Research said loan growth may slow down in an environment with a higher interest rate but the impact would not be big as the magnitude of the rate hike is expected to be small (less than one percentage point) at 25bps to 50bps in 2014 to 2015.
“The banks’ asset quality would be resilient to the rate hike. Based on our calculation, a 25bps increase in OPR would raise the monthly loan installment by only 2.2%, assuming a loan amount of RM200,000 and a tenor of 20 years.
“Despite the rate hike, we do not advise investors to increase their hold in Malaysian banks given the concerns on topline growth, affected by slower loan growth and margin erosion,” it said.