KUALA LUMPUR (Nov 4): If Bank Negara Malaysia (BNM) implements a surprise overnight policy rate (OPR) hike on Thursday, banks with higher domestic loans and floating-rate loans would be the primary beneficiaries while leaving other banks behind, according to an analyst from BIMB Securities Sdn Bhd.
The research house said that should BNM implement a surprise OPR hike by 25 basis points, the net profit of banks would increase by an average of 3%, with their net interest margins expanded, but some banks would benefit more than others.
“Except for MBSB, whose higher sensitivity is attributable to a lower earnings base, Alliance Bank Malaysia Bhd (KL:AMBM) and AMMB Holdings Bhd (KL:AMBANK) are expected to be the biggest beneficiaries of an OPR hike.
"By contrast, Malayan Banking Bhd (KL:MAYBANK) and CIMB Group Holdings Bhd (KL:CIMB) are likely to see the smallest earnings impact,” said BIMB Securities in a note on Wednesday.
The research house explained that, for a 25-basis-point increase in the OPR, Alliance Bank and AMMB’s net profit would rise by around 4.2% and 3.5% respectively.
This is primarily due to their predominantly domestic loan books, which account for almost 100% of total loans, against the sector average of 87.4%. Additionally, both banks’ floating-rate loans are above the industry average.
However, regional banks Maybank and CIMB are expected to benefit the least, with net profits projected to increase by only around 1.4%, mainly due to their lower exposure to floating-rate loans and smaller proportion of domestic loans, limiting the benefits of higher interest rates.
The OPR is the benchmark interest rate set by BNM that banks charge each other for overnight loans to cover short-term funds or liquidity shortfalls.
There is speculation that the central bank will raise the OPR due to Malaysia’s economy growing faster than expected, seeing a 5.6% growth over the predicted 4%-5% growth in the first nine months of 2026, to slow down growth and prevent a possible market crash.
That said, BIMB Securities said that the OPR is likely to remain unchanged, maintaining its expectations of BNM keeping it at 2.75% during its final Monetary Policy Committee meeting on Thursday due to prevailing economic conditions not warranting an immediate adjustment.
BIMB Securities remains positive on the banking sector, anchored by resilient fundamentals, robust loan growth, contained credit costs and increasingly attractive valuations following recent market corrections.