KUCHING: Banks with asset-sensitive balance sheets such as Alliance Financial Group Bhd (AFG), CIMB Holdings Bhd (CIMB) and Malayan Banking Bhd (Maybank) are said to be the biggest beneficiaries from the 25 basis point hike in Overnight Policy Rate (OPR).
The research team at Affin Investment Bank Bhd (Affin Research) said these three banks will stand to gain based on its sumilation which will impact net profit, net interest margins (NIMs) and price target for banks under its purview.
“For illustration purpose of a full year’s impact given a 25bps rate hike, AFG, CIMB and Maybank are expected to see an increase of 2.6 per cent, 2.3 per cent and 2.1 per cent respectively, based on financial year 2014 estimate (FY14E) net profit,” it said in a note yesterday.
“We expect NIM enhancement of 4bps on AFG, 3bps on CIMB and 3bps on Maybank.
Meanwhile, Affin Research believed the interest rate impact would be less prominent for other banks such as Hong Leong Bank Bhd, Public Bank Bhd and RHB Capital Bhd.
“For AMMB Holdings Bhd, though it appears that the asset side of the balance sheet is less sensitive to rate movement versus the liability side, management has in place ALM (asset-liability management) strategies to hedge rate movements. Hence, net profit impact is expected to be neutral.
“The repricing effect of loans is expected to be more significant in the first 3 to 6 months, and will gradually be tapered down by the repricing effect of deposits.”
Meanwhile, analysts at Kenanga Investment Bank Bhd pegged AFG as the “ultimate beneficiary from the OPR hike, with some 90 per cent of its loans being floating-rated and more than 30 per cent of its deposits are in the form of current accounts and savign accounts (CASA).
“We estimate that the OPR hike will result in an increase in its interest yield by 15 to 17bps for AFG,” it said. “As a result, AFG’s net interest margin is expected to expand the most, all else being equal.
“The positive impact of the rate hike could be bigger if and when we see more rate hike in future.”
Kenange Research believed the OPR hike by Bank Negara Malaysia is short-term positive to Malaysian banks as NIMs will expand following the almost immediate re-pricing upwards of floating-rated loans and the lag in the repricing of fixed-rated deposits.
“Negligible increases in costs relating to demand and CASA also support the NIM expansion. However, differences in the loan and deposit profiles of banks mean that some will gain more while others less.”