Most banking counters up on likely postponement of NSFR

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KUALA LUMPUR (Oct 24): Most banking counters were up this morning following news reports that the net stable funding ratio (NSFR) that Bank Negara Malaysia (BNM) previously intended to be implemented at the earliest on Jan 1, 2019 would likely be implemented a year later instead.

BNM governor Datuk Nor Shamsiah Mohd Yunus said in a speech at BNM's Financial Stability Conference yesterday that the central bank intends to extend the observation period for the new liquidity standard for another year to 2020.

Among the top 15 gainers this morning were Hong Leong Bank Bhd, which was up 24 sen (1.2%) to RM20.84; Public Bank Bhd, up 10 sen (0.4%) to RM25; AMMB Holdings Bhd, up 7 sen (1.8%) to RM3.95; and Malayan Banking Bhd (Maybank), up 10 sen (1.1%) to RM9.50.

In its report on the banking sector today, AmInvestment Bank noted that the majority of banks have already reported NSFRs which are above the minimum requirement of 100%

"Nevertheless, we believe there are still some financial institutions (FIs) with NSFRs lower than the minimum requirement. This deferment will provide more room for these FIs to catch up on their NSFR levels.

"Generally, we expect deposit competition to ease from the changes on the NSFR. It is expected to lessen pressure on banks' funding cost and net interest margin (NIM) in the near term," the firm said.

AmInvestment had an overweight call on the banking sector, with buy calls on RHB Bank Bhd (fair value (FV): RM6.10 per share), Public Bank (FV: RM26 per share), Alliance Bank Bhd (FV: RM5 per share), BIMB Holdings Bhd (FV: RM5.40 per share), Maybank (FV: RM10.70 per share) and Malaysia Building Society Bhd (FV: RM1.27 per share).