KUALA LUMPUR (Jan 26): Alliance Bank Malaysia Bhd and RHB Bank Bhd are seen among "clear-cut winners" from Malaysia's interest rate hike due to the financial service providers' high variable rate loan portfolio, according to Affin Hwang Investment Bank Bhd.

Affin Hwang wrote in a note today that the list, which also takes into account banks' current and savings account (CASA) ratio, includes Malayan Banking Bhd (Maybank), Public Bank Bhd and Hong Leong Bank Bhd.
 
Affin Hwang said: "The clear-cut winners (more asset-sensitive balance sheets) are Alliance Bank (which has 90% variable rate loans in its portfolio; 35.3% CASA ratio) and is entirely domestic-centric; RHB Bank (82.5% variable rate loan portfolio; 27% CASA ratio); Maybank (71% variable rate loan portfolio; 35% CASA ratio); Public Bank (76.9% variable rate loan portfolio; 25.5% CASA ratio) and Hong Leong Bank (76.5% variable rate loan portfolio; 26.8% CASA ratio)".

Based on analysts' estimates, Alliance may be the biggest beneficiary after Bank Negara Malaysia raised the overnight policy rate (OPR) by 25 basis points (bp) to 3.25%. Affin Hwang said Alliance is expected to benefit the most given its high variable rate loan portfolio, and CASA ratio.

CIMB Investment Bank Bhd wrote in a note today its scenario analysis shows that Alliance could be the biggest beneficiary of the rate hike among full-fledged Malaysian banks. 

"We estimate that the 25bp hike in OPR could raise its (Alliance) FY19F net profit by about 8.2%. This is underpinned by its high proportion of floating-rate loans (at about 89% of its total loans for FY19F). RHB Bank is the second-biggest beneficiary, with an estimated impact of circa 6% on its FY18-19F net profits from the 25bp OPR hike, based on our estimates."