Latest news with #StatutoryReserveRequirement
The Star
21-05-2025
- Business
- The Star
Positive developments in 1Q25 for Affin Bank
CGSI Research sees potential net profit growth of around 10% in 2Q25 at around RM130mil. PETALING JAYA: Affin Bank Bhd's had a decent start with a RM124mil net profit in the first quarter of financial year ended March 31 (1Q25). The performance was below consensus estimates of analysts but they note a couple of positive developments in the quarter. One is overhead costs were flattish year-on-year (y-o-y) in 1Q25 potentially due to cost savings from its early retirement scheme implemented in 4Q24. The other positive as observed by CGS International (CGSI) Research is the bank's cost of fund declined by 11 basis points y-o-y and 16 basis points from 4Q24, which led to an expansion in net interest margin (NIM) in 1Q25. The research firm sees potential net profit growth of around 10% in 2Q25 at around RM130mil, underpinned by higher net interest income and benign credit cost. 'Upgrade to 'hold' as we see Affin as one of the key beneficiaries of the recent Statutory Reserve Requirement (SRR) cut and potential overnight policy rate (OPR) cuts by Bank Negara in 2025,' CGSI Research said in a report. It expects the central bank to cut OPR by 25 basis points to 2.75% in the second half of this financial year. For every 25 basis point cut in OPR, this would raise Affin's financial year 2026 (FY26) net profit by around 3%, it projects. As for FY25 to FY27, it projects the bank's net profit to grow between 1.7% and 2.5%, taking into account the SRR cut from 2% to 1% effective May 16, 2025. The profitability estimates also factored in Affin's bonus issues which led to an issuance of 133.3 million new shares. Another positive is the bank's robust inflow of CASA (current account savings account) from Sarawak government-linked companies. According to analysts, this signals early tangible benefits stemming from the Sarawak government's strategic involvement as the bank's largest shareholder. Coupled with the anticipated implementation of the Sarawak state civil servant payroll and a strong pipeline of new corporate payroll accounts, Hong Leong Investment Bank (HLIB) Research said these underpins expectations for further NIM expansion. At the same time it noted that Affin is actively reducing reliance on expensive fixed deposits to focus on its overall deposit pricing strategy to further strengthen its NIM. Loan growth moderated to 7.1% y-o-y, falling short of management's ambitious 12% loan growth target for 2025. However, HLIB Research said the bank's management indicated a substantial loan pipeline of RM9.5bil remains. Coming to asset quality, Affin's gross impaired loan (GIL) ratio improved 10 basis points from the previous quarter to 1.84% in 1Q25. 'Despite that, mortgage GILs continued to trend upwards given pockets of stresses in that portfolio. 'Meanwhile, management highlighted that stress testing indicated that while the impact from loan exposure related to US trade is minimal, a greater adverse impact is anticipated from a broader economic slowdown instead,' said HLIB Research, which kept its 'buy' call and RM3 target price on the stock. According to analysts, the bank's management has retained its key 2025 guidance of a return on equity of 6%, loans growth at 12% and NIM of 1.55%. Valuation wise, HLIB Research said the stock currently trades at one standard deviation to its 10-year mean. 'We believe the premium is fair given the emergence of the Sarawak government as Affin's largest shareholder, presenting it with better prospects to leverage the state's growth ambitions.' However, UOB Kay Hian Research is maintaining its 'sell' call with a target price of RM2.38 despite an improving CASA mix. It thinks the value unlocking potential from the Sarawak government has been more than priced in. The Sarawak government emerged as Affin's major shareholder in Nov 2024. At the time of writing the stock was trading at RM2.71, which is close to levels it was at the start of 2025.
The Star
19-05-2025
- Business
- The Star
Investment banks anticipate Bank Negara's 25bps OPR cut in 2H25
KUALA LUMPUR: Investment banks expect Bank Negara Malaysia (BNM) to lower the Overnight Policy Rate (OPR) by 25 basis points (bps) in the second half of 2025 (2H 2025) amid softer first quarter (1Q) growth and tariff disruptions. Public Investment Bank Bhd said the earlier 100 bps reduction in the Statutory Reserve Requirement (SRR) is expected to serve as a timely liquidity buffer, allowing BNM to maintain a data-dependent stance amid elevated external volatility. Should the 90-day tariff suspension lapse without renewal, raising Malaysia's effective tariff exposure to 24 per cent, the investment bank anticipated a more front-loaded policy response, comprising two 25 bps OPR cuts in 2H 2025. "This would be intended to mitigate negative spillovers on trade performance, investment activity and broader economic sentiment. "With three scheduled policy meetings remaining this year -- July 9, Sept 4 and Nov 6 -- the window for calibration remains open, though timing will depend on incoming data and developments surrounding global trade negotiations,' it said in a note today. Meanwhile, Hong Leong Investment Bank said the projection was made in view of external uncertainties and modest inflationary environment. As for Standard Chartered (StanChart), it continued to expect BNM to cut the policy rate by 25 bps in July, with more cuts (beyond 25 bps) in 2025 likely if data deteriorates by more than expected. The bank has lowered its 2025 gross domestic growth (GDP) growth forecast to 4.2 per cent from 5.0 per cent previously on weaker-than-expected 1Q GDP growth and tariff disruptions. "We estimate that a 24 per cent and 10 per cent reciprocal tariff rate will subtract 0.7 percentage point (ppt) and 0.4 ppt respectively, from GDP, assuming that 30 per cent of Malaysia's exports are exempt from tariffs and a United States (US) import elasticity rate of 0.5 times. "The hit to GDP from a fall in demand of trading partners will also likely weigh on growth in 2025,' it said. Nevertheless, StanChart expects consumer spending and investment are likely to remain the key pillars of growth in 2025. - Bernama
The Star
15-05-2025
- Business
- The Star
FBM KLCI struggles for momentum amid cautious buying interest
KUALA LUMPUR: The FBM KLCI struggled to maintain its upward momentum due to weak buying interest, closing the morning session lower. At midday, the FBM KLCI slipped 8.57 points or 0.54% to 1,574.94, just marginally higher than its intramorning low of 1,574.13. Gainers numbered 396, trailing losers at 513, while 471 counters remained unchanged. Trading volume stood at 2.4 billion shares, valued at RM1.3bil. Nestle, the top decliner, fell 82 sen to RM83.98, followed by Kluang, which lost 40 sen to RM5.56. PETRONAS Dagangan eased 32 sen to RM20.22, while Tenaga declined 18 sen to RM14.12. Among the gainers, Malaysian Pacific Industries rose 42 sen to RM21.74, Heineken added 24 sen to RM27.74, Carlsberg gained 22 sen to RM19.38 and Chin Tek climbed 11 sen to RM8.30. TA Securities said the local market should stay in consolidation mode as investors will likely remain cautious ahead of the release of Malaysia's first-quarter GDP data later this week. 'Immediate resistance remains at 1,610, with the next major resistance seen at 1,644, followed by the August 2024 high of 1,684. Immediate support is maintained at 1,526, with 1,490 and 1,444 acting as stronger supports,' it added. Meanwhile, Malacca Securities remains optimistic about the outlook for blue-chip stocks, citing strong fundamentals and stable dividends as key drivers amid renewed foreign fund inflows into the Malaysian market. The research house said that despite global headwinds from US tariffs and geopolitical tensions, Bank Negara Malaysia's move to lower the Statutory Reserve Requirement (SRR) from 2% to a 14-year low of 1% may boost loan uptake among businesses and help stimulate economic growth. 'We maintain a positive outlook on the construction sector, driven by ongoing data centre investments and major developments across the country, such as the JSSEZ. The Construction Index has also broken above its MA200 resistance,' Malacca Securities said.
The Star
13-05-2025
- Business
- The Star
Bank Negara's 100bps SRR cut gives room to assess US tariff impact - Moody's Analytics
KUALA LUMPUR: The 100-basis point cut in the Statutory Reserve Requirement (SRR) ratio by Bank Negara Malaysia (BNM) last Thursday is intended to give the Monetary Policy Committee some breathing room to assess the impact of the United States (US)-led tariff shock on exports, said Moody's Analytics. Moody's Analytics economist Sunny Nguyen said the move would also give the central bank time to determine whether the recent subsidy‐driven spike in inflation is a one-off and, crucially, to gauge the US Federal Reserve's next course of action. "A lower SRR allows banks to lend more, boosting economic growth by increasing credit availability. Liquidity injections are the policy equivalent of loosening your tie in case you decide to change shirts,' she said in a research note today. On the overnight policy rate (OPR), Nguyen said BNM is likely to keep it at three per cent through August. She explained that based on past patterns, BNM typically begins easing by cutting the SRR first, followed by interest rate cuts once data confirms a slowdown and inflation concerns ease. "This strategy eases pressure on the ringgit by giving banks immediate relief, while also reassuring foreign investors that the Malaysia-US yield gap won't narrow too quickly,' she added. Nguyen said this situation points to a possible 25‐basis point rate cut to 2.75 per cent in September, depending on the headline consumer price index, which is expected to rise as subsidies on RON95 fuel are gradually withdrawn. However, inflation must remain convincingly below three per cent year-on-year as the US Federal Reserve (Fed) resumes its easing cycle-something futures markets are tentatively signalling could begin in September. "If the Fed moves first, pressure will come off the ringgit, giving BNM room to trim without fear of a sharp impact on the local currency,' she said. She added that a lower Fed funds rate would also affect Malaysian growth, and that cheaper global financing would help cushion the impact of tariffs on Malaysia's export‐heavy electronics sector, while easing the burden of pandemic-era corporate debt rollovers. "For the broader outlook, we expect both central banks to cut rates in September. Real gross domestic product growth should ease to about four per cent from five per cent in 2024 and is projected at 3.9 per cent in 2026. "Domestic demand will remain the economy's main engine, drawing power from civil service pay rises and the construction of the East Coast Rail Link,' she concluded. - Bernama
New Straits Times
09-05-2025
- Business
- New Straits Times
Bursa Malaysia opens higher on trade optimism, SRR cut
KUALA LUMPUR: Bursa Malaysia opened higher on Friday lifted by positive investor sentiment after the US and the UK reached a trade deal. At 9.23am, the FBM KLCI rose 4.69 points or 0.3 per cent to 1,547.43. The key index added 2.25 points at the opening bell to 1,544.99 points versus Thursday's close of 1,542.74. A total of 263 gainers led 205 losers in the broader market while 321 counters were unchanged. Rakuten Trade Sdn Bhd equity research vice president Thong Pak Leng said the index closed just above the 1,540 level on Thursday possibly due to some profit taking activities illustrating that market undertone is still in a cautious mode. "Nonetheless, we are hopeful that Bank Negara Malaysia's aggressive one per cent cut in the Statutory Reserve Requirement to one per cent, the lowest in 14 years will spur market confidence," he said in a note. The firm also expects banks to play their part to be less stringent in loan approvals. "We view Bank Negara's latest move may encourage some buying interest on the banks and expect the index to hover within the 1,545-1,560 range today," added Thong.
