Banking sector will be sturdy if BNM cuts interest rate


The banking sector in the country will remain sturdy, if Bank Negara Malaysia (BNM) implements a cut in the interest rate.

RHB Banking Group MD and CEO Datuk Khairussaleh Ramli (picture) said while the current rate is considered steady, BNM might just introduce the cut according to the latest data.

“The governor has already said any decision on rate cuts or rates would be data-driven. The inflation environment is quite subdued.

“The global growth forecast  has also been reduced. The International Monetary Fund (IMF) has actually reduced its forecast from 3.7% to 3.5%.

“We are still holding the rate to be steady. But obviously, if the data says otherwise, then we believe BNM will make decisions accordingly,” he told reporters at a press conference after the launch of the bank’s first Multi Currency Visa debit cards in the country in Kuala Lumpur yesterday.

Talk of BNM’s possible move to cut the interest rate is gathering steam of late.

Economists are in agreement that it would take place in tandem with the pace of the global economic growth.

An interest-rate cut by BNM — which might be announced at the upcoming Monetary Policy Committee (MPC) meeting on May 7 — seems more likely to help sustain domestic economic growth against a more patchy external economic climate.

The Overnight Policy Rate has been maintained at 3.25% since January 2018, after the central bank raised the benchmark rate by 25 basis points from 3% in view of the steady domestic growth then.

On Jan 21, the IMF reduced its global economic growth forecast for 2019 to 3.5% from 3.7% last October.

Khairussaleh said any rate cuts would benefit RHB’s customers, particularly from the borrower segment’s point of view, as it would alleviate additional financial burdens.

“Normally, for any interest-rate reduction, banks will have a reduction in net interest income. But hopefully over time, there will also be adjustments from the reduction,” he said.

He said a rate cut would even facilitate and accommodate further borrowings.

“That’s on the supply side. But we will also need to look on the demand side,” he said.

Meanwhile at the launch ceremony, Khairussaleh said RHB is the first local bank to introduce Multi Currency Visa debit cards which offer access to 13 foreign currencies, alongside the ringgit.

Both the RHB Multi Currency Visa debit card and RHB Premier Multi Currency Visa debit card now support the US dollar, Canadian dollar, euro, Japanese yen, British pound, Australian dollar, New Zealand dollar, Swiss franc, Hong Kong dollar, Saudi riyal, South African rand, Singapore dollar and Thai baht.

He said the launch is part of RHB’s commitment towards making banking more convenient, fast and seamless for its customers.

“The debit cards will empower our customers’ lifestyles and provide a gateway for various financial needs without the hassle of having to open accounts in different countries.

“Currently, we have more than two million debit cards in circulation and in the first year, we expect to issue 15,000 new Multi Currency Visa debit cards,” Khairussaleh said, adding that the bank is currently working on rolling out more currencies soon.

Visa country manager for Malaysia Ng Kong Boon said customers will enjoy competitive exchange rates on 13 foreign currencies when they use the debit cards, without any conversion charge or transaction fees.

“Based on our research data, travel is one of the top spend categories among Malaysians
— so this product would be extremely beneficial to them when they travel and pay for their purchases in foreign currencies.

“With the debit cards, Malaysians no longer need to go to the money changer and worry about bringing too much cash with them when they travel,” he said.

Customers can open a RHB Multi Currency account, which offers the multi currency cards with a minimum initial deposit of US$1,000 (RM4,080) or its equivalent.