PETALING JAYA: Banking stocks reacted across the board on Bursa Malaysia, after the government said it would have high-level discussions to compel lenders to waive interest fees on deferred loans.
Prime Minister Datuk Seri Ismail Sabri Yaakob, to a question in Parliament, said the government is aware of the situation and it is in discussions with the Finance Ministry.
Banking stocks, a number of which had started the day higher or unchanged, saw the deterioration in prices after the announcement.The broader market was negative biased with losers outnumbering gainers 715 to 339 and 425 counters unchanged.
There were 4.66 billion shares worth RM3.01bil changing hands while the FBM KLCI declined 14.62 points to 1,555.51.
The possibility of more moratoriums will put a dampener on banks, according to an analyst.
UOB Kay Hian, in a Sept 8 report, said the implementation of the more broad-based opt-in loan moratorium since July had led to an expected rise in the take-up rate for targetted loan assistance from a sector average of 14% as of the end of the second quarter to 27% as of early last month.
Among the banking groups, CIMB, Hong Leong Bank and Public Bank’s level of targetted assistance was at the lower end of the industry range at 21%, 21% and 23%, respectively.
As for Maybank and RHB, the level of targetted assistance was hovering at industry average of 27% and 28%, respectively.
The level of targetted assistance for AmBank, BIMB, Alliance Bank and Affin Bank was above the industry average of 32% to 34%, said the research house.
It added that the banking sector is expected to book in a net modification loss in Q3 arising from the recent increase in targeted assistance from 14% to 27%.
“However, the impact is going to be significantly less than the RM1.7bil (8% to sector earnings) that the sector had experienced in 2020. This is because the increase in targeted assistance take-up rate of roughly 15 percentage points this round is much lower than the 85% take-up rate in 2020 given the opt-in nature of the current targeted assistance.
“In addition, customers who choose to extend their loan tenure to reduce their monthly loan repayment will end up having to pay a higher cumulative interest and this would essentially help to partially offset the loan modification losses,” said UOB Kay Hian in the report.
Meanwhile, Ismail Sabri told the Parliament yesterday that an automatic loan moratorium would help ease the plight of the rakyat affected by the pandemic.
“The government is aware of the situation faced by the rakyat and will try to assist as best as possible,” he said in response to a supplementary question by Pontian MP Datuk Seri Ahmad Maslan.
In a statement yesterday, the Finance Ministry said it had instructed banking institutions to work on the exemption from interest payments for recipients of the bank loan moratorium immediately.
Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said, in the statement, that this would involve recipients of the moratorium from the bottom 50% of Malaysians for a period of three months in the fourth quarter of 2021.
Meanwhile, in a related development Opposition leader Datuk Seri Anwar Ibrahim had suggested, in the parliament sitting, that an injection of an additional RM45bil could be made for Covid-19 relief and any implementation of a loan repayment moratorium must be meaningful.
In April last year, an automatic six-month moratorium on all bank loans – except for credit card balances – was granted for those affected by the Covid-19 outbreak.