The latest OPR hike will benefit banks’ NIM as majority of the domestic banking industry’s loans are floating-rate facilities, which will reprice faster than deposits.
“This is as some depositors switch back to term deposits amid higher interest rates,” said Wong Yin Ching, RAM Rating Services Bhd’s co-head of Financial Institution Ratings.This is given the full-year effect of deposit upward repricing from the four OPR increases last year. Hong Leong Investment Bank Research, said the hike will help offset negatives like deposits repricing combined with CASA being used and alternatives to fixed deposits.
According to HLIB Research’s sensitivity analysis, every 25 bps increase in the OPR may widen the sector’s NIM by five to six basis points, which would increase earnings forecasts on a full-year basis by 3% to 4%.
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