Thank you for the explaination...
I got it already, sir

KUALA LUMPUR: Bank Negara has reduced the overnight policy rate (OPR) by 75 basis points to 2.5% and reduced the statutory reserve requirement (SRR) from 3.5% to 2%, effective from Feb 1.

SRR reduce means that more cash flow out to banking from BNM.... so more liquidity

and BLR gonna drop, so expect more loans application or earning reduce for bank

so we will see how banking react tomorrow or probably today already react on this news...

So drastic change? So desperate?

Bank will surely reduce the interest rate on FD and saving account book... So they did not making any losses.....Should be a bad news for those having millions of savings in their FD.

This post has been edited by darkknight81: Jan 21 2009, 10:38 PM

Bank get hit by the margin, because saving account interest how to cut another 0.75%? Current account some more. And some FD for 1~2 years one still have to honour the high interest... margin shrink, NPL hike... bad...

Yup agree with that. But lowering down the interest rate will reduce the burden of the loan taker and indirectly should have reduce NPL...

Besides, it also encourages more ppl to take loan but the things is will this increase NPL?

in other words

a. lowest interest rate for FD => liquidity flow out from bank to other investment instruments
b. bank profit gather from the delta between loan accounts and saving/current/FD accounts will be a little bit impacted
c. with lowest BLR => mean loan is a bit cheaper and provided the loan is efficiently used for biz and pay back on time
d. SRR reduction => bank have more cash and therefore bank can utilize for other investment

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Added on January 21, 2009, 10:56 pm"Besides, it also encourages more ppl to take loan but the things is will this increase NPL?"

Yup, this is certainly a doubt here as during the downturn, those ppl can go jobless, salary cut, that may contribute to NPL

isn't that tax cut for individual or corporate is the right way to boost the demand of goods and also to create more job opportunities



This post has been edited by Kamen Rider: Jan 21 2009, 10:56 PM

I only can agree with a & d

wait i a little bit worry, dilemma, and probably realize that banking biz nature exposing to all kind of biz, so during down turn, they will be hitting hard
so are we right on our portfolio to pick up banking stocks????

should we choose recession proof or less recession impacts counters as our portfolio.... e.g gambling sectors, consumer sectors etc...

but one thing i observe of all the rebound when the downturn over, most of the time, banking sector is the one to move first...

so confuse, now i know why ppl said we are surrounding by fear and greed in any part of market cycle...

One thing, I notice that banks tend to recover faster bcos they could write back their NPLs when more and more people are able to settle the loans during the good time. Or selling off the securities pledged with better demands.The sum could be as high as 500m a year.

Correct me if I am wrong.

This post has been edited by SKY 1809: Jan 22 2009, 06:20 AM

Yes, that's the case... NPL still ok in some case (even bad debt also can write back sometime), but really depends on the magnitude of damage done by recession... And bank's account is the easiest to manipulate and hardest to detect...

Wait a minute, isn;t that Bank has the most strict auditing and process control e.g. SOX, ISO etc....
so guess there were many banking collapse before due to flaw in the financial systems....

as reported many many years that Pbbank has the lowest NPL and if not mistaken when NPL surge during 1998 Asian financial crisis, PBbank dropped to as low as 90 cents and that was the time Pbbank gained momentum and sustain as high as 12.00 plus plus... now it dropped to 8 plus so still got margin for it to fall...

If SEC can't do it, how you think about BNM? Maybe Malaysia Boleh...
PBB have one of the best asset quality in the country, if not the best, that's something that cannot be deny. And people are willing to pay higher premium for expectation of highly transparent operation (honors).

one more question, looking at PBB-01 at 8.50 and PBB at 8.70,
and PBB-01 will enjoy the dividend + treasury share, so isn;t that PBB-01 is a "cheaper" than PBB

funny the gap different is 0.20 cents

This question had been answered 245246 times, I have one tread closed for that also... haha...

I should pin up query and answer about it, so that the number won't more than 250,000 times. Haha

Yes, both shares are the same, you get the same benefit, same dividend, same voting right.

The gap arise because there are more seller in -O1 as means more foreign shareholders want to dispose compared to local one. After all, price of a share is based on market supply and demand.

thanks for the information, actually i know that 01 is meant for foreign buyers but local buyers like us can buy also
and also know that both can enjoy the same dividend

but yet why such a huge gap, perhaps u have answer me due to demand and supply, but for this gap, isn;t that pbb-01 is "cheaper" compared to pbb

and shouldn;t they just merge this 2 counters into same quote....using same bids

Because the share is issued in different way. May be need some changes in the share issuing procedure, then may be yes. Separate it out means those foreigners want to buy this stock, they definitely know when buying O1, they surely have voting right in it. As under BNM rules, foreigners can't have more than 30% voting right stake in commercial bank, so 30% shares are set aside for O1.

Yes, it is a little cheaper, but 0.20 is not a huge gap. Wait until you see 0.50~1.00 gap, then it is huge which happened on last time, which I can buy -O1 then dump the local, and getting some cash out of it. Haha.

very smart, i should learn from you as well....

I made the mistake last time by picking up PBBANK.......... without O1 <ouch>