AmBank: Overnight pol­icy rate likely to stay at 3%

The Star Malaysia - StarBiz - - News -

PE­TAL­ING JAYA: Bank­ing group AMMB Hold­ings Bhd (AmBank) is fore­cast­ing the overnight pol­icy rate to stay at 3%, with a nor­malised rate in the range of about 3.50%.

The sixth-largest bank based on as­set size has in­di­cated the pos­si­bil­ity of two rate hikes next year.

AmBank Group chief ex­ec­u­tive of­fi­cer Datuk Su­laiman Mohd Tahir reck­oned the first rate hike to be in the first quar­ter of 2018, while the sec­ond to come in ei­ther in the sec­ond half of 2018 or the first half of 2019.

While a de­cent growth in re­tail loans in the bank­ing sys­tem is ex­pected, Su­laiman also fore­cast the gross im­paired-loan ra­tio for banks to be at be­low 2%, sim­i­lar to the lev­els seen in the sec­ond half of 2017.

“We an­tic­i­pate the OPR will likely be main­tained at 3% and we be­lieve the nor­mal­i­sa­tion rate for OPR is around 3.50%, sug­gest­ing there could be two rate hikes with the first pos­si­bly in the first quar­ter of 2018 and sec­ond ei­ther in sec­ond half of 2018 or first half of 2019,” Su­laiman said in a state­ment fol­low­ing AmBank’s sec­ond quar­ter ended Sept 30, 2017 fi­nan­cial re­sults yes­ter­day.

On the back of a healthy gross do­mes­tic prod­uct growth of 5.9% this year, driven by fac­tors such as strong pri­vate con­sump­tion from higher wages and in­come sup­port mea­sures, strong ex­ports and in­fra­struc­ture spend­ing, Su­laiman fore­sees mild pres­sure on banks’ net in­ter­est mar­gin to linger.

“How­ever, it will be of lesser ex­tent since the im­ple­men­ta­tion of net sta­ble fund­ing ra­tio re­quire­ment has been post­poned to no ear­lier than Jan­uary 1, 2019.

“Banks have suf­fi­cient liq­uid as­sets with an in­dus­try liq­uid­ity cov­er­age ra­tio of 133% as at end Au­gust 2017, well above the reg­u­la­tory’s 100% re­quire­ment,” he noted.

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