With the BR framework and we could see Maybank the lowest at 3.2 big banks generally lower BR, for all banks effective loan rate basically the same my QUESTION is is it wiser to have loans with bigger banks than smaller banks by lookIng at the BR

Nope, there is no basis to say BIG banks will have lower BR in general. You may refer to post#97 and #115 to see the current BR of the banks.

By just looking at the BR, no conclusion can be drawn whether bigger banks are better than smaller ones. Still have to look at the all in rate, ie the effective lending rate.

This post has been edited by Jasoncat: Mar 27 2015, 09:35 PM

Thanks. Salute!!

One more thing

Going forward are the bigger banks going to have less volatile BR than smaller banks, so getting loans with bigger banks is better?

How volatile the BR is not depending on the size of the bank. BR cmprised of 2 things - the benchmark cost of funds and the SRR. SRR requirement is the same for all banks. As for the benchmark cost of funds, different banks may use different benchmark but most are using 3M KLIBOR. Banks that use the same benchmark, regardless their size, is expected to exhibit the same volatility and quantum of adjustment.

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This post has been edited by Jasoncat: Mar 27 2015, 11:51 PM

Ok. Great

OCBC rate better start from April

BR change from 4.02% to 3.92%

When the banks were required to submit their BR to BNM in December 2014, 3M KLIBOR that time was high at around 3.80% - 3.90%. With the 3M KLIBOR easing to around 3.70% - 3.75% now, it is expected that those which use the KLIBOR as the benchmark cost of funds will see their BR reduced accordingky after 31 March. I believe other banks should have similar adjustments.

yes you're right, there's some changes in CIMB rate as well. New conventional rate and islamic differences 0.1% , while BR is 4%. In fact CIMB side their interest is increasing.

This post has been edited by ims2628: Mar 31 2015, 07:43 PM

Noob question here


Now the BLR +/-x is replaced by BR + y

What is y? And are both BR & y will fluctuate? And how the opr will affect BR?

I suggest you read the earlier posts to have a better / complete understanding of BR framework. In brief, "y" is made up of credit risk, liquidity risk premium, overhead cost and profit. "y" has to be fixed throughout the loan tenure while BR may fluctuate. Whenever OPR changes, the BR is expected to change at the same direction with the same / similar quantum.

Thank you @Jasoncat

As the y=spread is fixed throughout our loan tenure, can I say bank with lower BR is better?
As I cannot see any difference, even bank to bank BR is different but after sum up with spread, the effective interest is the same.

I don't agree that banks with lower BR is better. A low BR probably comes with higher spread, and this resulted in the effective lending rate being the the same or not too far away from other banks. We still need to look at the all-in rate ie the effective lending rate. Says there is a change in OPR - very likely most if not all of the banks will adjust their BR accordingly regardless of low or high BR.

Hi all sifu, which bank are better if base on below br and spread ?

mxyank = ( 3.20 br + 1.25 ) = 4.45
uxb ( 4.02 br + 0.43 ) = 4.45

I have the same question too.

Since the spread is fixed and BR flutuate, does this mean that banks with lower BR will potentially have more "room" to increase compare to those banks with already high BR?

This post has been edited by poweredbydiscuz: Apr 10 2015, 11:09 AM

What is the difference between BLR and BR?

Isn't BNM has a fixed formula for BR? The BR is all depending on each individual bank's costs?

the BR is not same for all the banks and it's depending on each individual bank. Maybe you can refer to https://www.imoney.my/articles/all-about-th...-base-rate-work to get a quick overview on Base Rate for each individual bank.

Yes, it's true. Effective January 2, 2015, the Base Lending Rate (BLR) structure was replaced with a new Base Rate (BR) system. Under BR, which will now serve as the main reference rate for new retail floating rate loans, banks in Malaysia can determine their interest rate based on a formula set by the central bank.

Under the previous BLR, the rate was set by Bank Negara Malaysia (BNM) based on how much it costs to lend money to other financial institutions. Meanwhile, the cost to borrow money was determined by the Overnight Policy Rate (OPR) set by central bank.

With the new BR, interest rates are determined by the banks’ benchmark cost of funds and Statutory Reserve Requirement (SRR). Other components of loan pricing such as borrower credit risk, liquidity risk premium, operating costs and profit margin will be reflected in a spread in the new BR framework.

Hi friends,

I'm also curious as stated by poweredbydiscuz.

Does anyone has any comment on his statement?

Don't quite agree. Have talked about this quite a lot earlier in this thread, perhaps you can read the earlier post.