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【出版时间及名称】：2010年2月马来西亚银行业研究报告
【作者】：CIMB-GK
【文件格式】：pdf
【页数】：38
【目录或简介】：
Rate hike supports OVERWEIGHT. Imminent rate hikes spell margin expansion
prospects for banks as the upward adjustment of BLRs is typically larger than the
change in fixed deposit rates. We estimate that every 25bp rise in BLR would mean
3-4% earnings accretion for banks, which would outweigh any negative impact from
rate hikes including slower loan growth, higher NPLs and mark-to-market losses for
their bond holdings. This reinforces our OVERWEIGHT stance on the sector. The
potential re-rating catalysts for the industry include (1) rate hikes, (2) strong
earnings growth in 2010, (3) increase in investment banking income, (4) strong
growth potential for the overseas operations of the larger banks, and (5) potential
GP write-backs. AMMB remains our top pick for the sector.
• Rate normalisation around the corner? Bank Negara Malaysia (BNM) has
signalled that interest rates could be raised sooner than earlier thought, leading our
economic research team to up its OPR target for 2010 from 2.00% to 2.50%. The
intention is to “normalise” interest rates rather than cool down economic growth.
Even if there is a 50bp hike to 2.50%, OPR would still be one of the lowest rates
historically. For the upcoming rate hikes, we believe that the increase in deposit
rates would be narrower than the BLR hike, implying margin expansion for the
banks.
• Every 25bp hike to enhance net profit by 3-4%. Our simulation shows that every
25bp rise in BLR accompanied by a 12.5% increase in fixed deposit rates would
enhance the combined net profit of the banks under our coverage by 3-4%. The
biggest earnings impact would be on Alliance Financial Group (+7.9% for FY11) as
it has the highest proportion of floating-rate loans of 82% and a high proportion of
low-cost deposits, which account for about 30% of its total deposits. AMMB
Holdings would be least affected with an impact of only 1.3%.
• Higher funding costs slower loan growth? In the last round of rate hikes in
2005-06, loan growth did moderate from 9% yoy in Nov 05 to 7.3% yoy in Nov 06.
For the expected hike in 1H10, we believe that the moderation would be smaller
than the 170bp seen in 2005-06 because (1) the 50bp hike is lower than the 74bp
rise in 2005-06, (2) the BLR would only be 6% after the hike compared to 6.72% in
2006, and (3) supported by economic recovery, SME loan growth is improving
which will partly offset the slide in consumer loan growth.
• Expecting tamed NPLs despite rate hike. In theory, NPLs would rise following the
rate hike due to borrowers’ increased loan servicing burden. Ironically, banks’ gross
NPL ratios continued to slide after the last round of rate hike in 2005-06. Also, any
negative impact from rate hikes would be largely offset by the economic recovery.
As such, rate hikes would not change our expectations of stable NPLs in 2010.
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