PETALING JAYA: A number of


banks will raise their base lending rates (BLR) and base financing rates (BFR)


in tandem with Bank Negara's announcement to raise the overnight policy rate


(OPR) by 25 basis points (bps) from 3% to 3.25% effective 16th July 2014.

As a result, the BLR and BFR


will be adjusted to 6.85% from 6.6% per annum previously.

The banks that have confirmed


that the new rates will be effective tomorrow include Malayan Banking Bhd


(Maybank), Hong Leong Bank Bhd (HLBB), CIMB Group Holdings Bhd, Public Bank


Bhd, Alliance Financial Group Bhd and OCBC Malaysia.

It is understood that some


banks may announce the interest rate revision on a different date, as they are


still considering the quantum of the deposit rates, which will impact their


earnings eventually.

Bank


Simpanan Nasional senior vice-president and head of distribution Akhsan Zaini


told StarBiz: " We are


still studying the impact of the rate hike on our bank before we announce the


adjustment next week, tentatively."

He also said the bank had yet


to decide on how much it would adjust for its deposit rates.

CIMB Research expects the rate


hike to enhance banks' earnings by 1% to 2%, as their net interest margins


(NIM) widen.

Maybank Investment Bank


Research, on the other hand, anticipates NIM growth to be short-lived due to


price competition.

The research unit had said in


an earlier report: "Our forecasts already assume a 50-bps rate hike in 2014,


and as a result, we are looking at a marginal four-bps aggregate NIM


improvement in 2015 versus a seven-bps contraction in 2014."

Some banks have also announced


the revision of their deposit rates, but the quantum varies from one lender to


another as well as the deposit tenure.

Among others, Maybank's deposit


rates will be revised upwards by up to 15 bps.

HLBB and Hong Leong Islamic


Bank Bhd (HLISB) will increase their fixed-deposit and Term Deposit-I rates by


up to 25 bps.

Following the revision, HLBB


and HLISB's new deposit rates for one, six and 12 months would be 3.05%, 3.2%


and 3.3%, respectively.

Hong Leong Banking Group's


managing director Tan Kong Khoon said the group would continue to work closely


with its customers to address their financing and savings needs. Meanwhile,


OCBC Bank (M) Bhd and OCBC Al-Amin Bank Bhd will be increasing their fixed-deposit


and General Investment Account-i rates respectively by up to 20 bps, depending


on tenures effective July 21.

In a statement, Maybank said: "The last revision in Maybank's BLR and Maybank Islamic's BFR was on May 11,


2011 when they were revised from 6.3% to 6.6% per annum."

OCBC Bank's mortgage lending


rate, the alternative to using BLR for home loans, will also increase, to 5.7%


compared with 5.45% previously.

JP Morgan Research noted that


it was cautious on banks, as the combination of rate hikes and subsidy


rationalisation would test the credit risk management of Malaysia's


consumer-led loan growth in the past five years.

It preferred liquid banks and


upgraded HLBB and Maybank to "overweight" from "neutral".

Published:


Tuesday July 15, 2014 MYT 12:00:00 AM by The Star Online