Malaysian public bank expects rising competition
KUALA LUMPUR: Public Bank Bhd said it expects to meet its loan growth target of 14% this year but warned that increasing competition in home mortgages, its largest business, would hurt net interest margins going forward.
Increasing competition in home mortgages will inevitably result in some compression of the net interest margin going forward, said founder and chairman Tan Sri Teh Hong Piow.
He added that the compression was manageable. More than half of the company's pre-tax profit comes from its home loans business, according to analysts.
In the first nine months this year profit from the segment rose 26%. Public Bank will continue to keep its credit cost and overheads low to manage the compression in net interest margin, Teh said in an e-mailed interview.
Malaysian banks, including Malayan Banking Bhd and CIMB Group Holdings Bhd, have reported strong earnings this year as the economic recovery has spurred increased borrowing, greater capital market activities and a rise in spending.
This has led to a fierce competition among the domestic banks for a larger share of the lucrative home and car loans market.
However, with hot money flowing to emerging markets, central banks in the region have taken steps to tighten mortgage rules that may affect loan growth for banks.
Bank Negara recently implemented a 70% loan-tovalue ratio for those buying their third property. -PB News
GHAZIBAROTHA: Corp Commander Peshawar Asif Yaseen, American Ambassador Cameron P. Muntar and Brigadier General Nagata sitting for a group photo during the departure ceremony of US Military Humanitarian Assistance Mission team which was here to assist Pakistan to curb the problems created due to the flood, at Ghazi Air Base. -Online