KUALA LUMPUR, July 10 (Bernama) -- Bank shares were mixed in early trade today as Bank Negara Malaysia’s (BNM) interest rate cut exerted immediate pressure on banks’ net interest margins (NIM).
At 10.02 am, Public Bank gained three sen to RM4.29 with a total of 2.06 million shares traded, and CIMB added two sen to RM6.59 with 2.03 million shares changing hands.
However, Maybank fell two sen to RM9.68 with 358,200 shares traded, while Hong Leong Bank dropped eight sen to RM19.28 with 19,700 shares changing hands.
In a research note today, Hong Leong Investment Bank Bhd (HLIB) said an overnight policy rate (OPR) cut typically exerts pressure on banks’ NIM due to the immediate repricing of variable-rate loans, which contrasts with the lagged repricing of fixed deposit (FD) rates that only adjust upon maturity.
However, it observed that Malaysian banks had pre-emptively moved to cushion the impact by lowering promotional and conventional FD rates by 5-20 basis points (bps) since April in anticipation of the rate cut.
“This should smoothen the immediate negative impact. We estimate that a 25 bps OPR cut will lead to a 3-4 bps sector NIM contraction and a 2-3 per cent reduction in our profit forecasts, excluding potential mark-to-market gains on bond portfolios and lower defaults,” it said.
Meanwhile, RHB Investment Bank (RHB IB) opined that the rate cut is not expected to impact the banks materially, as the statutory reserve requirement (SRR) was pared down to one per cent (from two per cent) in May.
“BNM’s move to release additional liquidity into the system via May’s reduction in the SRR to one per cent from two per cent should help to offset the bulk of the impact from the OPR cut.
“Our estimates suggest that the sector ‘s profit after tax and minority interests could rise by a cumulative 1.3 per cent from the 1 percentage point decline in SRR,” the investment bank said.
HLIB has maintained its “Overweight” call on the sector as it views the OPR cut in the early second half of 2025 as a positive development.
RHB IB is “neutral’ on the sector and forecast the impact of the OPR cut should be broadly cushioned by the SRR reduction.
The central bank’s monetary policy committee reduced OPR by 25 bps to 2.75 per cent on July 9 with the OPR corridor of the ceiling and floor rates correspondingly reduced to three per cent and 2.5 per cent, respectively.
-- BERNAMA
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