‘IMPACT OF OPR CUT TEMPORARY’
Group sees growing fee-based income, such as from wealth management and bancatakaful
BIMB Holdings Bhd expects to be temporarily impacted by the lower Overnight Policy Rate (OPR) but is confident that its ever growing fee-based income will
negate this.
Chief executive officer Mohd Muazzam Mohamed said it was natural for banks, including BIMB, to experience short-term negative impact whenever there was a cut to the OPR.
“All banks have a positive correlation to the OPR. So when OPR is up, typically their income is higher but when the OPR comes down, net income is lower. All banks will be in the same situation,” Muazzam said after BIMB’s annual general meeting, here, yesterday.
“When OPR is lower, we will have to lower the base rate (BR) and base lending rate (BLR) and this will definitely impact us temporarily. However, this will eventually stabilise and will be negated by our growing fee-based income, such as wealth management and bancatakaful.”
He added that in terms of whole year financial results, the group would still be in the “neutral”.
“(In the interim), our overall results will be neutral because we expect other sources of income will be better this year.
“For example, our fee-based income and for Bank Islam Malaysia. In terms of financial numbers, we will still be in neutral.”
Research houses have named BIMB as one of the two most affected companies following Bank Negara Malaysia’s decision to cut the OPR to three per cent from 3.25 per cent this month.
In terms of loan growth, Muazzam said the bank would be able to meet the industry average rate of six to seven per cent.
“In view of the economic challenges and our current loan size of some RM46 billion, we are targeting our loans growth to moderate slightly to between six and seven per cent, from last year’s 8.5 per cent,” he said.
Muazzam believes that the group would be able to maintain a return of equity at above 15 per cent before tax for this year.
Bank Negara’s recent banking data showed that industry’s loan growth had slowed to 4.9 per cent year-on-year (YoY) in March this year compared with five per cent posted YoY in February this year.