Lenders having mixed views on more OPR cuts

The latest OPR cut was done in July where BNM reduced it by 25bps to 1.75%


LENDERS in the country have mixed views on whether Bank Negara Malaysian (BNM) will be keen to cut its Overnight Policy Rate (OPR) further given the backdrop of ongoing economic uncertainties brought by the pandemic.

RHB Bank Bhd sees no further cut in the OPR this year following the reopening of various sectors in the country.

Group MD Datuk Khairussaleh Ramli said even if there is any OPR cut, it would largely depend on the trajectory of the economic recovery.

“In the third quarter (3Q) while the year-on-year (YoY) GDP will contract, it will contract with a much smaller rate and we also expect by the 4Q, there will be some positive GDP growth even though it is small.

“Even in certain segments of our businesses, especially on the retail side, we do see improvement in terms of applications coming in,” he said at a virtual press conference last Friday.

Khairussaleh believed the improvement was contributed by the incentives given by the government in the homeownership fund, as well as the purchase of auto vehicles.

Although Malayan Banking Bhd (Maybank) also echoes the same view of the OPR being lowered further than the current 1.75%, its group president and CEO Datuk Abdul Farid Alias is not discounting the idea completely either.

“If such a rate cut were to happen, it is expected to have a negative impact of one basis point (bp) to two bps on our net interest margin,” he told reporters during Maybank’s 2Q financial results briefing last Thursday.

On the other hand, CIMB Group Holdings Bhd CEO Datuk Abdul Rahman Ahmad who was appointed group CEO in May said there is a possibility for another OPR cut this year.

“We expect a low interest-rate environment to continue for the rest of the year.

“Specifically on OPR, our expectation is the OPR will be maintained even though there could well be a possibility for another OPR cut,” he said at the company’s first-half financial results online press conference last Friday.

AMMB Holdings Bhd (AmBank) last Thursday anticipates BNM to cut the OPR to 1.5% or 1.25% to support the economy battered by the Covid-19.

BNM slashed the OPR for the fourth time in July due to concerns over weak economic conditions. It was cut by 25bps to 1.75% and the central bank had reduced the OPR by a total of 100bps from January to May this year as concerns grew over a sharp slowdown in 2Q.