Banking modification losses in focus again

Modification losses happen when changes are made to the terms of an existing loan by a bank to its customer. A moratorium – which is a temporary halt to one’s loan payments made to the bank –tends to result in such losses. “The modification losses, if they are incurred, will be treated as non-core costs for banks.

PETALING JAYA: Banks will likely again face another round of modification losses as a result of the automatic loan moratorium that just started, but this time, the losses are not expected to hit them as much as the first time.

According to CGS-CIMB, local lenders which may have to incur modification losses will see a lower quantum of losses than the RM1.58bil last year.