KUALA LUMPUR: In the event of an overnight policy rate (OPR) cut, banks net interest income will be reduced, according to RHB Banking Group managing director Datuk Khairussaleh Ramli.

“Normally, for any interest rate reduction, banks will have a reduction in net interest income. But hopefully over time, there will also be adjustments in deposit rate following the reduction in interest rate,” he told reporters today.

While acknowledging that inflation in the country is subdued, Khairussaleh stressed that any decision on whether to cut the rate or not by the central bank will be data-driven.

For now, the group is keeping to the view that the central bank will hold the key rate steady at 3.25%.

"In our case, we are still holding [to the view that] the rate will be steady. But obviously if the data says otherwise, then we believe Bank Negara [Malaysia] will make decisions accordingly," he told reporters yesterday.

Expectations have been on the rise that the central bank will cut its key rate, given downside risks to growth prospects, low inflation, and following the bank’s more dovish tilt seen in its Annual Report 2018.

In particular, it wrote about “building policy space and buffers preemptively” and stated that “the thrust of monetary policy in 2019 is to remain accommodative to ensure supportive conditions for sustainable economic growth amid the subdued inflation outlook".

Khairussaleh went on to say that any rate decrease will benefit borrowers, and "help them alleviate any burdens as far as their financial commitments are concerned".

He also acknowledged that a reduction in the key rate will facilitate and accommodate further borrowing, but stressed that other measures also need to be taken to ensure an "accommodative" business environment for banks.

“That [adjusting the OPR] is on the supply side. But we will also need to look on the demand side. This is where fiscal measures are also important to be looked at, not just monetary measures,” Khairussaleh said.

He was speaking to reporters after launching the bank's multi-currency debit cards, which provide access to 13 foreign currencies alongside the Malaysian ringgit, making it the first local bank to offer the service in debit cards.

The cards come in the form of its RHB Multi Currency Visa Debit Card and the RHB Premier Multi Currency Visa Debit Card.

The foreign currencies supported are: US dollar, Canadian dollar, Euro, Japanese Yen, Pound Sterling, Australian dollar, New Zealand dollar, Swiss franc, Hong Kong dollar, Saudi riyal, South African rand, Singapore dollar and Thai Baht.

RHB managing director Datuk Khairussaleh Ramli said the launch of the debit cards reflects RHB’s commitment towards making banking more convenient, fast and seamless for its customers.

“Currently we have more than two million debit cards in circulation and in the first year, we expect to issue 15,000 new Multi Currency Visa debit cards,” he said in his speech during the launch.

With the card, customers will be able to withdraw cash from any ATMs worldwide, have the flexibility to take advantage of prevailing competitive exchange rates, and earn interest on foreign currency balances. They can also use the card for overseas retail spending without additional conversion fees typically associated with credit cards.

To get the debit cards, customers can open a RHB Multi Currency Account, with a minimum initial deposit of US$1,000, or its equivalent.