BLR no more now change to BASE RATE (BR)
Maybank really something wrong set only 3.2 %, the plus other bank will be just 0.8, Maybank have to set the spread at 1.45 to 1.5 %.
- HSBC Bank Malaysia Berhad (HSBC) had announced that, effective 2 January 2015, the HSBC's Base Rate (BR) is 3.90%.
- Further, we understand that Public Bank (PBB)’s new base rate is 3.65%.
- To recap, Bank Negara Malaysia (BNM) had, in mid-December 2014, formalised the new BR that will be effective from 2 January 2015. This is not new.
- Recall that the BR replaces the Base Lending Rate (BLR) as the reference rate for the pricing of retail loans/financing facilities.
- This requirement applies to applications received for new retail loans/financing facilities and refinancing of existing retail loans/financing facilities, and the renewal of existing revolving retail loans/financing facilities, on or after the effective date.
- The BR is to be based on the financial service provider (FSP)’s benchmark cost of funds and statutory reserve requirement (SRR).
- As an indication, PBB’s new mortgage rates will now be based on BR plus spreads, i.e. BR +0.8% to BR +0.9% (for loan mortgages of RM250k and above).
- This means that PBB’s effective mortgage rates will be at 4.45% to 4.55%. This is similar to mortgage rates of BLR less spreads, or BLR -2.3% to BLR -2.4%. BLR is currently 6.85%.
SAME SAME but USE DIFFERENT TERMS.
- There are no further updates from other banks yet, in terms of the BR, although there are speculations that some BR may be set as low as 3.20% for some banks.
- We had earlier expected the BR for most banks to be set within a narrow and similar range.
- However, we believe that the spreads will eventually be adjusted so that mortgage rates are likely to reflect the previous range given the ongoing competitive pressure.
- Nevertheless, the wider-than-expected BR range provides some room for banks to enhance NIM through different spreads initially.
- This is positive in the short-term as this may mean lesser pressure on NIM.
- We remain NEUTRAL on the sector.
Source: AmeSecurities