Bank Negara issues updated exposure draft on licensing for digital banks
(theedgemarkets.com / theedgemarkets.com March 03, 2020 11:26 am +08)

KUALA LUMPUR (March 3): Bank Negara Malaysia (BNM) has today issued an updated exposure draft on the licensing framework for digital banks that incorporates a simplified framework applicable during the foundational phase.

In a statement today, BNM said the simplifications aim to reduce regulatory burden for new entrants that have strong value propositions for the development of the Malaysian economy, while safeguarding the integrity and stability of the financial system.

"Digital banks will be required to comply with all equivalent regulatory requirements applicable to incumbent banks after the foundational phase."

Key features of the simplified regulatory framework include:

~ Capital adequacy requirement: The risk categories to calculate the credit and market risk components for risk-weighted assets under Basel II capital framework have been rationalised into simpler categories; and

~ Liquidity requirement: 25% of the digital bank's on-balance sheet liabilities must be held in high quality liquid assets.

BNM is extending the consultation period for the exposure draft until April 30.

It said all feedback on the exposure draft are to be submitted to the central bank by then. "Applications for new licence(s) will be open upon issuance of the policy document."


https://www.theedgemarkets.com/article/bank...g-digital-banks

A lot of borrowers not really understand the interest mechanism how to impact lending policy

A lot of borrowers misleading & miscalculating the lending cost

I will give you direct example :-


Scenario 1 :-

Mr.A has borrowed the loan from Bank during Dec'19, the bank offering him by BR + 0.50% = 4.25% (during Dec'19 period, BR only 3.75%)

So now Bank Negara Malaysia (BNM) suddenly had announced 2 time interest rate cut (OPR cut), 1st cut at 23/01/20 by 0.25% and 2nd cut at 03/02/20 by 0.25%

Simultaneously Mr.A will enjoy lower interest rate charged by 0.50%, which mean now Mr.A can enjoy 3.75% home loan interest rate



Scenario 2 :-

Mr.Y now intend to apply home loan but unfortunately bank can offer BR + 1.00% = 4.25% (new BR is 3.25% after OPR cut 2 times)

So Mr.Y has asked the bank, why your bank still maintain offering 4.25% since BNM had already announced 2 times OPR cut??

The Bank officer told Mr.Y that, despite BNM had already cut 2 time OPR, it does not mean new home loan application can lower down the interest rate because now bank profit margin getting lower & lower

If, the Mr.Y taking the home loan right now, ie BR + 1.00% = 4.25%, in future Mr.Y need to absorb higher interest cost

The reason behind is because BR can adjust anytime but spread rate (ie +1.00%) is fixed for entire home loan, in other word, if next few years later BNM gradually increase back OPR at the same time BR also adjust back, let say gradually increase by 0.75%, so Mr.Y home loan interest rate cost become 5.00%


Now you know why NOT BENEFIT for those new home loan application

One more important things

A lot of borrowers also wrong perception about the refinancing scenario

Most of the time, refinancing need to bear some cost, such as :-

1) Legal fees

2) Valuation report fee

3) MRTA or MLTA or MLTT insurance

^^ insurance cost will adjust or revise by respective insurance company every year subject to market conditions (like inflation, bank interest policy, economic factor)

If Mr.Y maybe wanted to refinance later, Mr.Y will need to bear the above costs (don't forget age factor also impact on the cost of MRTA insurance coverage)

At the end Mr.Y still bear higher cost in order to secure the home loan




** You think is it wisely to take up any new home loan right now ?????






This post has been edited by DisneyHome: Mar 4 2020, 07:25 AM

but also bank might decrease the BR for the new application tho

Yesterday many dupes were happy after receiving the news. Some even think it’s time to flip properties. Poor soul.

It might be 1 more round of OPR cut but not hurry

BNM also need to protect banks cost

If you look at past 20 years OPR in Malaysia, of course you will know how far can BNM further reduce interest rate

In fact not much room for further reduce

I am not blaming to any property agents or sale staffs

Most of the time they are sweet talk, not even understand the bank interest rate cost mechanism, so of course will approach buyers to buy now in order to enjoy lower cost

In fact, right now 2 BIG issue already put on the table

1st - interest rate cost for future

2nd - how much global economic impact on property market, most of the time when recession or turmoil come, property sector is the 1st sector heavily affected


** I am not advising you not to buy property, if buy for own occupation, it might wisely calculate the cost & right property

If your flip or investment wise, you need bear your own huge risk

Let me further elaborate the instalment for you

Assuming my property purchased is RM 500,000

Loan amount : RM 450,000 (assuming only property loan without other fees)

Loan tenure : 35 years

Interest rate offer : BR + 1.00% = 4.25% (after 2 times reduced by BNM) (current BR 3.25%)

Instalment amount : RM 2061 per month


Assuming BNM gradually increase back OPR (simultaneously BR also gradually increase back) by 0.75% later 3 years

new interest rate charged : BR + 1.00% = 5.00% (BR become 4.00% after gradually increase back to 0.75%)

New instalment amount adjusted : RM 2271 per month

** Assuming the new project need 3 years completion & vacant possession


You know how much need to bear extra cost each month if gradually increase OPR later !!


RM 450,000 x (5.00% - 4.25%) = RM 3375 per year

equivalent to RM 281 per month extra

it's good that disney boss clearly states the impact of the up and down of BR/BLR from OPR.
personally i always advocate when considering loan for housing, to add 2% to it and standby the funds accordingly.

Agree with TS...


I just bought one condo..

My rate is 4.05%

Interest 1.30 %+ IBR 2.75%

Im so scared later after OPR increase

Relax.

That is a very good interest rate.

And IBR not adjusted yet. Once adjust it’ll be 3.8%.

Steady.

Scenario 2 is highly unrealistic as it will be not a 0.5 % diff after 2 cut, a more realistic diff should be around 0.1%

scenario 2 means Bank get extra 0.25% profits margin because cost of borrow already reduced by 0.25% if maintain same rate as before.

Old loan tak kasi potong?

So far any good banks/SA for new loans can recommend ah?

Very scared if we make new loan application and OPR increase back..

Very scared if we make new loan application and OPR increase back..

the bank is offering 4.25% still despite the rate cut?

Too sad to say confirm no interest rate change for new home loan application despite OPR cut whereby announced by BNM yesterday (I have called my some bank officers to reconfirm)

That's mean, if interest rate offered before was BR + 0.75% = 4.25% (before base rate cut was 3.50%), now become BR + 1.00% = 4.25% (after base rate cut to 3.25%)

Bear in mind, during Jan'20 BNM had announced OPR cut simultaneously BR also follow the suit but same practice for majority bank (ie no change of interest rate offer for new home loan by that time)

My personally point of view, I will feel very high risk if I intend to take up home loan right now

Since Jan'20 BNM already cut 0.25% & now OPR cut again 0.25%, which mean less than 2 months already cut 0.50%

So I need to bear the risk for future cost if BNM gradually normalise the OPR

Since majority commercial bank not willing to reduce home loan interest rate offer, after 2 times BNM OPR cut, no point to challenge current market unforeseen circumstances

Better wait, see & monitor approach to save our cost of living

Don't forget, home loan is always carry "BIG CHUNK" of debt for entire life

Some banks practice with same installment amount but higher principal reduction on each installment. U need to monitor the monthly transaction to see tat.

If the respective bank not reduce your instalment, actual is indirectly assist you to reduce more principal amount

Did you know how much you need to pay for interest cost each month again your monthly intalment !!!

If your loan tenure is 35 years, at the starting point, interest cost already cover by 78% of your instalment amount, which mean only 22% can reduce your principal amount

Of course interest cost will gradually decelerated & principal amount cover will be accelerated but need longer period of time

In calculation based on my above scenario, if your instalment is RM 2061 then interest cost already RM 1607 per month, only left RM 454 amount to reduce your principal

So you think if I take the loan right now, unfortunately 3 years down the road, BNM going to normalise the OPR, what happen to my instalment !!! What happen for my monthly interest cost !!!


**Wisely investment or purchase is right now priority

Pbe potong trus for last reduction, this time dunno yet.

I have been watching some members here still misleading for those people intend to apply the home loan

Please reconfirm respectively bank officer who assist your home loan application

You need wisely to ask what is the different right now (after Jan'20 & Mar'20 2 times OPR cut) compare with before rate cut

Really? So bank follows the OPR cut by reducing BR, but increase the interest rate to maintain back the mortgage interest?

A few post back you also mentioned, when BNM announce OPR increase, our mortgage loan will hike more than expected example from 4.25 (BR 3.25 + Interest 1) to 5% (BR 4 + 1)??

Lol. Bank win liao lo

When year 2009
OPR is 2%

Still got space to cut rate

https://www.bnm.gov.my/index.php?ch=mone&pg=mone_opr_stmt


If you look at above OPR decision, BNM even though aggressively cut rate to 2.00% during 2009 but very fast to normalise back to 3.00% in year 2011

Based on current offered by respective banks, even though 2 times OPR cut (BR also follow suit) but unfortunately spread rate increased back to normal the effective rate for new home loan applications

As I mentioned earlier, If I want to take up new home loan right now, quite high risk for the coming next few years once BNM normalise the OPR again

For those taken home loan before 2020, I can say congratulation to you all

For those intend to take new home loan, I can say wisely to calculate your monthly budget future & risk factor how far you can undertake

Always remember "Historical Data" don't lie you

Only Human always can lie you

The for funny things is if I purchase new property, at least need to wait 3 years for completion & vacant possession

During construction period, I only serving interest charged by progressively completion of each stage

Even though, might be, this 2 or 3 years I can willing bear the risk of interest cost by 4.25% (subject to no changes on this 3 years) because still serving interest cost from small ticket of interest charged to gradually increase until VP

Unfortunately after I got my home key, going to start instalment, BNM going to start normalising OPR, so my instalment also gradually increased & monthly interest charged also increased

Don't forget right now supply more than demand market situation, if I want to rent out to cover my cost, rental market become more & more competitive

Yes, Long road to go, so I don't think OPR is really matter for new project buyer like us, since all loan now is more on semi flexi, no point to care so much on this OPR, just pay the progressive interest and instalment, that it. hahahaha

if you still getting 4.25% interest today... then you better go do some homework and get a better deal so you won't get a that bad of a hit compare to those who got it before the 0.5% drop. Be a smart consumer and not get shortchange by the OPR drop.

If BR drop, but the particular bank increase the + rate, to normalise the drop in BR, then this bank easily lose a lot of business to other competitor.

When OPR drops, no matter how, borrower generally see reduction in the interest payment across, just degree more and less compared to OPR.

If one still stuck with higher loan interest despite OPR reduction, better review your loan or you may have made a poor decision to take up such a loan, like fixed rate loan or the bank is giving poor competitive rate.

The normal loan rate now should b 3.65% for existing loan

New loan for gd payor stil around tis rate

Some claimed current economy slowed down could be worse than 1997 AFC.

This post has been edited by icemanfx: Mar 7 2020, 08:13 AM

Thanks TS for sharing his comment. There is good good or bad interm of lower down the interest rate.

In my point of view, you can buy subsales property now instead of buying under construction project. Because subsales is full disbursement. So you can enjoy lower interest rate now.

Also, if you do refinance now, u can enjoy lower interest rate to use ur money to settle high interest rate debt such as credit card or personal loan.

Some mentioned tis b4 last round. Dementia???

Now the main issue is not easy to do refinancing

Unless you are low gearing & personal profile sufficient strong

Unfortunately a lot ppl holding few units property also hardly to refinance

When market not stable, banks definitely very cautious to review all credit facilities

Recently some majority banks already tightened lending policies, no matter refinancing or new property purchase

You can’t blame the banks.. when rate is cut, banks source of funds (fixed deposit rates) are still locked at higher rates... banks can’t offer lower rates as yet... it will take some time before they attract new FD at lower rates, then they can lower the spreads in the future... banks not in charity.. if u tak suka.. then don’t take the loan .. this is just reality

Really? Which bank is offering this, assuming i have good track record

Few banks. Try 1 by 1. đŸ˜‰

Yours a new loan?

Approved in Jan but just disbursed. đŸ˜�

Dun worry tis rate is stil there. Any1 can make it happen.

In first round of bnm rate cut, covid 19 wasn't a consideration. Loan interest rate cut is unlikely to mitigate supply chain interruption in the short term.

Typical of "for me to know, for you to find out". Answer is same as no answer.

Ironic.......

According to some beans counters; if current market sentiment persists for a few more months, many stretched companies may not survive.

This post has been edited by icemanfx: Mar 7 2020, 12:44 PM

Your loan offered was before 2 time OPR cut

If not mistaken, you having loan with PBB by offering BR + 0.63% = 4.15% (before 23/01/20)

So now your are enjoying 3.65% after 23/01/20 (OPR cut 0.25%) + 03/03/20 (OPR cut again 0.25%)

Of course for those taken loan before 23/01/20, definitely can

I also having 3.70% interest rate offered but I took the loan last year

I pity those going to apply new home loan, definitely not so lucky to enjoy low rate as us






This post has been edited by DisneyHome: Mar 7 2020, 12:50 PM

Meaning u hav no idea wats goin on đŸ˜‚

S&P: NPLs to rise for Malaysian banks as political uncertainty adds to Covid-19 blow

(Surin Murugiah / theedgemarkets.com March 05, 2020 11:05 am +08)

KUALA LUMPUR (March 5): S&P Global Ratings expects slower credit growth and a higher non-performing loan (NPL) ratio for Malaysian banks amid challenging operating conditions.

In a statement today, the rating agency said banks are facing a multitude of headwinds from a position of strength, supported by their solid performance in 2019.

S&P credit analyst Nancy Duan said the global outbreak of Covid-19 and renewed domestic political uncertainty add obstacles for Malaysian banks, which are already grappling with the effects of a slowing economy and dampened investor and consumer sentiments over the past year.

“We are revising down our credit growth forecast for these banks to 1%-3% in 2020, from the previous 3%-5%.

“We now expect NPLs to reach 1.7%-1.8% of outstanding loans this year, versus 1.5% as of Dec 31, 2019,� she said.

Duan said the forecasts were based on the assumption that the global Covid-19 outbreak will subside and the domestic political stability can be restored over the coming months.

“We will need to revisit our numbers if those risks stretch beyond the second quarter of 2020.

“In our view, the government's recently announced credit relief measures could buy some time for the sectors most disrupted by the coronavirus outbreak,� she said.

Duan said S&P also expects more potential easing from Bank Negara Malaysia to shore up the economy, leading to a further 5-10 basis point compression of banks' net interest margin (NIM) in 2020.

“Our base case assumes stable capital adequacy ratios. However, risks are now tilted to the downside, given added drains on profitability and the rising dividend payouts announced by some banks last week,� she said.

Meanwhile, she said the rating agency expects a generally neutral impact to domestic banks from the RM20 billion stimulus package unveiled last week.

Duan said even before the government's stimulus package, the country's banks had rolled out their own programs to provide relief to struggling corporate borrowers.

“Supportive policies in the package could strengthen lifelines to banks' affected clients.

“However, we feel the special credit facility of RM2 billion is more symbolic than material, and that credit demand will weaken visibly, especially over the first half of 2020,� she said.

Duan said Malaysian banks' direct exposure to the most disrupted sectors, such as hotels, restaurants and airlines, is small at only a single-digit percentage of loan books on average.

“However, the global health emergency and domestic political upheaval are hitting oil prices, consumer confidence, and the broader economy in Malaysia. We will closely monitor such second-order effects and revise our forecasts as necessary.

“Malaysian banks are fundamentally strong, as reflected by their low NPL ratios, light credit costs, and large capital buffers.

"The banks' credit profiles have remained solid despite muted profitability in recent years. In our opinion, conditions in 2020 will put the banks to a much bigger test to their resilience,� she said.


https://www.theedgemarkets.com/article/sp-n...ds-covid19-blow

Why not choose to b the outstanding one tat survivesđŸ¤”

Cel*ka kerajaan pengkhianat muyidin for lowering FD interest... now retirement age has to be extended... cel*ka...

I also found some opinion from funds manager related to recent OPR cut preview :-


[BNM shared the same sentiment when it said on Tuesday that its monetary policy committee decided to reduce the overnight policy rate (OPR) by 25 basis points to 2.5% to provide a more accommodative environment to support the projected improvement in Malaysia's economic growth amid the global COVID-19 outbreak.

Today, Hong Leong Investment Bank Bhd wrote in a note that Malaysian banks' net interest margin slippage is seen to return in the first quarter of 2020 given the recent OPR cut.

"However, recovery would ensue in the following 3-6 months from downward deposit repricing (lagged impact),� Hong Leong said.]


https://www.theedgemarkets.com/article/klci...ovid19-concerns



What is meant by slippage in banking?

Fresh accretion of NPAs during the year or a falling below the current position of standard assets of the bank is a slippage. ... A sharp rise in slippage has major impact on provisioning and net profit of the bank. Low slippage or no slippage in asset quality shows how asset qualities are managed by the bank.




This post has been edited by DisneyHome: Mar 7 2020, 01:05 PM

PAS urges merger of Malaysian banks to address liquidity concerns
(Ahmad Naqib Idris / theedgemarkets.com March 06, 2020 11:41 am +08)


KUALA LUMPUR (March 6): PAS central economic, real estate and entrepreneur development committee vice-chairman Mazli Noor has urged for the consideration of a merger of banks to address liquidity concerns in the nation’s financial system.

In a statement yesterday, he said that a merger is “inevitable� and that it is a much needed move given the current situation, urging industry players to act fast.

Mazli said the party’s recommendation follows Bank Negara Malaysia's (BNM) decision to cut the overnight policy rate (OPR) by 25 basis points to 2.5%, the lowest level in 10 years, which it said was part of a series of capital controls employed, which also includes the reduction in the statutory reserve requirement (SRR) to 3%.

“Analysts expect this situation to have an impact on net interest margins and earnings of the banking sector," he said, adding that some analysts are expecting the banking sector’s margins to see contraction of between 2% and 3%, which will then affect their earnings by 1% to 2%.

While Mazli agreed that the lower OPR will translate to lower borrowing costs for consumers, he said this has had other effects, especially the decline in the loan to deposit ratio, which he said stood at 87.6% as at January 2019.

He said this has forced banks to compete for deposits, which will affect their earnings.

Given the tight liquidity environment, a merger, he said, is the most optimum way to save the banking industry and to protect consumers.

“With an enlarged size, the banks will have better economies of scale to continue competing. The government has to facilitate this by initiating talks between the banks, suggest on business matching and by giving relevant incentives.

“Governance is also important as in any integration or business merger, good governance is a main factor for success,� he said.

Mazli also urged banks in Malaysia to expand regionally, following in the footsteps of Malayan Banking Bhd, CIMB Group Holdings Bhd and Public Bank Bhd, as the banks would be able to take advantage of an enlarged market which could improve their cash flows.

However, he added that this would only be effective in the event that a merger of the banks is completed.


https://www.theedgemarkets.com/article/pas-...uidity-concerns

Is it the right action taken right now ???

Is it benefit for all banks ???

Is it any benefit for all consumers???

Is it very very close to become monopoly banking industry ???

We are very fortunate.

PBB loan revised to 3.6 (promo) 3.72 (non-promo).

HLB 3.53 (promo) and 3.75 (non-promo)

That's reason why now all new home loan applications need to scale up the spread rate despite BR cut

At the end, the new home loan borrowers definitely will suffer if few years down the road, BNM normalise back the OPR

Sooner or later they need to pay more especially for those purchase from new project property because still no feel pain during construction period but after VP with full instalment start than different story

Easier said than done especially those highly leverage/geared.

poorperly is illiquid, it could take longer than expected to liquidate to adjust. only those prepared before the crisis could escape with less damage or injury.

Banks merger could mean the weaker party is stretched. some well known developers could fold from heavy debts.

This post has been edited by icemanfx: Mar 7 2020, 02:27 PM

So conclusion if i wanna buy for own stay this year, should i proceed or no?

Economic recession has little or no effect on gomen servants.


This post has been edited by icemanfx: Mar 7 2020, 02:58 PM

Buy if below market value.

Handbrake if project.

Whats this got to do with my question lol. I'm not gov servant btw

Project meaning? New launches?

I see....thats bad news....

Already brought 1..huhu

Yes.

Why u alwiz choose to b the kantoi species đŸ˜‚đŸ˜‚đŸ˜‚

U hav a choice. Noone force u to lose money wan. The rest leave it to god.

Further to tat u r 9 st ahead of any1 here how can u fail??? đŸ¤”

Whats the reason? Currently eyeing a new freehold launch, price seems reasonable

Until you are out from your coconut shell, your world is the coconut shell.

Until u r the expert in 1 particular field then u ll know how to handle

It's experience so to say đŸ˜�đŸ˜‰

Well I oso salute n respect ur con job well done in sucking the money fr ur naive clients. But 1 thg I failed to und. Wats the different between fund con job n prop guru skl??? 9 st ahead sifu pls enlighten đŸ˜˜

Tqtq

As said many times, until you are out from your coconut shell, your world is the coconut shell.

Oh true oso hor. No wonder ur coconut sounds like automated answering machine. Now I und liao. đŸ˜‚đŸ˜‚đŸ˜‚

OPR drop, Bank will soon try to compete and drop Loan Rate, might not be immediate but eventually.

Don’t bother. No references.

Just repeating same thing over and over again.

Facts remain unchanged e.g overhang.

This post has been edited by icemanfx: Mar 7 2020, 05:21 PM

Different skill set makes the difference đŸ˜�

One could only defy or ignore reality, gravity, long term economic equilibrium, the law of supply and demand temporary.

Meaning u hav no idea where to look for success???

One whole big round the botanical garden but stil lpplđŸ˜‚đŸ˜‚đŸ˜‚

As said many times, until you are out from the coconut shell, your world is the coconut shell.

Oh yea đŸ˜‰

Prime residential properties in KL are expected to record a decrease in value of up to -1.9% or zero growth for 2020.

KL recorded a 1% fall in capital value on the back of oversupply following a rise in the number of residential developments over the past few years.

According to the report, Dubai and KL recorded the largest rental falls over the year, with -5% and -4.1% respectively.

https://www.edgeprop.my/content/1656876/klâ...s-cheapest-2019

Original posting here: https://forum.lowyat.net/index.php?showtopi...post&p=95731496

HLB famous for giving ridiculously low interest for their promo rate. (2 years)

now alot of client apply refinance due to need to have standby cash for future investment or cash out to settle their credit card debts.

However, some bank is willing to give refinance cash out with debt consolidation service to settle their debts.

Copy paste from whatapps group:

Lowest rate for each bank (for new loan application)
*As at 10th March 2020* 1.30pm

☀ PBB - 3.9% (Gred A, 3.65%)
☀ RHB - 3.85%
☀ HLBB - 3.8% (If good profile can get 3.7%)

This post has been edited by AskarPerang: Mar 10 2020, 02:28 PM

Alliance Bank- 3.94%

HLB give 3.9% now. Below 4% consider quite good

Loan interest rate showed 3.85 online but installment due is still the same as before! When will it change? Rhb online

Just got my loan approved, these rates are valid (public bank that 3.65% not sure how to beg only will give)

For me, if anything +0.5% is > 4.15% is no no for me. I’m just assuming when BNM normalise 2~3 years down the road.

If 3.9% and +0.5% after normalise is 4.4% consider quite high d. That’s comparing with the 4.15% that I had previously (now 3.65%)

Installment due is always the same. Only the amount going into your principal is more since your interest is less now.

The amount due will only be different if you are just serving interest (undercon projects) currently, loan not yet fully disburse.

Instalment will be adjusted.

Bnm has reduced opr 0.75 (total) since last year. So if 3.9+0.75 = $$

What's cimb latest int rate?