Higher loan growth can offset impact of rate cut

KUALA LUMPUR: Banks in Malaysia will benefit from the recent cut in the overnight policy rate (OPR) if the move results in a higher loan growth, according to AmBank Group chief executive officer Datuk Sulaiman Mohd Tahir (pic).

However, he told StarBiz that the banks’ bottom line could potentially take a hit, in the event borrowing activities remain largely unchanged despite the rate cut.

Sulaiman also hinted that AmBank will be lowering its base rate by this week, following the lending rate cuts by other major banks in the country.

“We will follow whatever is guided by Bank Negara’s rate cut. We are working on it. The announcement should come out in one or two days,” he said after the launch of AmBank’s inaugural BizCONFERENCE Beyond Financing Series.

On May 7, the Monetary Policy Committee of Bank Negara reduced the OPR by 25 basis points (bps) to 3% from 3.25%, on the back of macroeconomic headwinds and signs of tightening of financial conditions.

Following the rate cut, Maybank and RHB have revised their base rates lower by 20bps, while CIMB Bank has lowered its base rate by 25 bps.

Bank Islam, on the other hand, has reduced its base rate by 26 bps.

Pundits expect banks to see short-term pressure on their net interest margins (NIM), due to the lower base rates. For context, NIM is a measure of the difference between the interest income generated by banks and the interest paid out to depositors.

Meanwhile, Sulaiman also said that AmBank is currently exploring opportunities to work with the government, in order to facilitate more Malaysian businesses to embark on technological adoption and embrace Industry 4.0.

“Our discussion with the International Trade and Industry Ministry is still in the initial stage. But the idea is to assess whether we can provide government grants and financing facility from AmBank to the participants of AmBank’s BizRace. That’s one way to look at it,” he said during a press briefing yesterday.

The AmBank BizRACE event is an entrepreneurship challenge competition aimed at providing small and medium enterprises (SMEs) with access to valuable knowledge-sharing sessions and development training.

Yesterday, AmBank launched its first BizCONFERENCE Beyond Financing Series entitled “Embracing Internet of Things”.

The Beyond Financing Series will cover four key topics namely Internet of Things (IoT), Green Business, Halal Business as well as Branding and Marketing.

“AmBank is keen to do our part by forming a dedicated panel of experts on IoT to help SMEs focus on what they need to do to accelerate IoT adoption in terms of execution and implementation.

“We are actively looking at several experts in the field and are also open to experts out there who would like to be part of this panel,” said Sulaiman.

AmBank , Sulaiman Mohd Tahir , loan , growth , offset , impact , rate cut ,


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