Sunday, January 28th, 2018

 

US farmers have much to lose if Nafta deal collapses

CHICAGO, Jan 28 —  A collapse of the North American Free Trade Agreement (Nafta), which US President Donald Trump has threatened to scrap, could create the most profound disruption for US farmers who produce grains, meats and dairy products sold…


‘Cheaper’ housing loans – there must be a quota, says analyst

PETALING JAYA: There must be a quota in the proposal by the government to reduce housing loan interest rates, as banks may not necessarily abide by suggestions that could add to their costs.

“I don’t think all applications for housing loans must be under this scheme. Banks will follow but they must allocate a quota for this. It’s like the PR1MA (1Malaysia People’s Housing Programme) where they allocate a certain amount for the scheme,” a banking analyst, who declined to be named, told SunBiz.

The analyst said different banks have different base rates, which determine their interest rates.

“If Bank Negara Malaysia (BNM) fixes the rate, this will impact the banks’ net interest margin because the way banks derive their base rates is very different. Some banks have high expenses and some have a low profit margin,” he said.

The analyst added that the Malaysian Financial Reporting Standards 9 (effective Jan 1, 2018) requires banks to make provisions for expected credit losses, rather than the current practice of providing only when losses are incurred. This means that banks will evaluate potential losses from borrowers’ default rate on loans.

“If BNM sets the rate, banks will incur more provisions, which will in turn increase credit costs,” said the analyst.

Since Jan 2, 2015, new loans have benchmarked on the base rate, which replaced the base lending rate (BLR) as the main reference rate for new retail floating rate loans, because BLR was thought to have become less relevant as a reference rate for loan pricing.

According to BNM, the base rate will be determined by the banks’ benchmark cost of funds and the Statutory Reserve Requirement. Other components of loan pricing such as borrower credit risk, liquidity risk premium, operating costs and profit margin will be reflected in a spread above the base rate.

The expected strong link between the base rate, market interest rates and the Overnight Policy Rate (OPR) will facilitate more complete adjustments to retail loan repayments when market interest rates adjust to an increase or a decrease in the OPR.

Last week, the OPR was increased by 25 bps to 3.25%, the first time since July 10, 2014. Possible downside risks from the OPR hike will be a slowdown in loan growth, either from lower loan demand or from higher loan rejection rate.

When a bank makes any adjustments to the base rate, a corresponding adjustment to the BLR will also be made.

The annual interest rate in the market for a standard 30-year housing loan/home financing product with a financing amount of RM350,000 and no lock-in period averaged 4.68%.

“The current loan rates are manageable and affordable as banks don’t gain too much and as borrowers, we’re not paying to much. It’s affordable and manageable,” opined the analyst.

Still, a proposal that would reduce housing loan interest rates across banks nationwide is expected to be presented to the Cabinet soon, which will ease the financial burden of those applying for house loans. Deputy Prime Minister Datuk Seri Ahmad Zahid Hamidi has said one of the reasons many housing units remain unsold is not just due to the supply glut but also to the inability of people to secure proper financing from banks.

The proposal was initially tabled by the National Housing Department and will need the approvals of the Cabinet and BNM for it to go through.


OPR hike could bump up banks’ earnings by 3% this year: Research houses

PETALING JAYA: Banks should expect some short-term boost to their margins following the hike in Bank Negara Malaysia’s Overnight Policy Rate (OPR) to 3.25% last Thursday, potentially increasing the banking sector’s earnings by about 3% this year, said analysts.

With the expected boost to the earnings of banks under their coverage, most of the research houses maintained their “positive” stance on the sector.

Analysts said they believe that banks with higher floating rate loans will benefit the most from the OPR hike, noting that Alliance Bank Malaysia Bhd (ABMB) will be a major beneficiary as its floating rate loans make up of 90.3% of its loan book.

“We estimate a rise of circa 3.9% to ABMB’s FY19 earnings from our previous forecast,” said MIDF Research.

For the regional banks, MIDF Research said it estimates Maybank and CIMB earnings will be lifted by 0.8%, due to the fact that their loan exposures are more diversified, with domestic loans comprising 58.1% and 57.0% respectively of their total loan books.

PublicInvest Research said RHB Bank should also benefit given its 82.5% variable-based loan portfolio, while Affin Bank is the least likely beneficiary as it has the largest proportion of fixed rate loans.

For sector exposure, it favours AMMB Holdings and CIMB.

PublicInvest noted that banks will most likely revise their lending and saving rates, with 25 to 27 bps seen on the assets (loans) and 22 to 23 bps on the liabilities (savings), as was similarly adjusted in previous rounds.

Nevertheless, HLIB Research said it believes that the timing gap between repricing of loans and deposits will only result in uplift to net interest margin (NIM) temporarily before it normalises due to competition and repricing impact.

“We expect the 25 bps hike in the OPR to boost sector earnings by 2-3%, whilst we expect a potential up to 2.5% uplift to bottom line for ABMB, and 2.1% for RHB and CIMB respectively.”

Meanwhile, MIDF Research said it expects the benchmark rate increase could possibly slow down loan growth this year, either from lower demand for loans or higher loan rejection rate.

However, the research house believes that the loan pipeline will continue to be robust in the first half of the year, driven by solid demand for borrowing and lending of mortgage loans despite the higher OPR and subsequent base rate hike.

“Our property analyst expects that there will be a negative impact to property demand in the short term but will subsequently normalise in two to three months time.”

MIDF Research maintained loan growth expectations of 6% year-on-year for 2018, while PublicInvest, which expects minimal impact on loan growth from the increase, forecasts growth of between 5% and 6%.

Malayan Banking Bhd announced today that will raise its base rate (BR) and base lending rate (BLR) by 25 basis points effective tomorrow, while fixed deposit rates will be revised upwards by between 20 and 25 basis points.

It is the second bank, after CIMB Bank, to announce the change after Bank Negara raised the OPR during its monetary policy committee meeting last Thursday. CIMB Bank and CIMB Islamic Bank will increase their BR and fixed deposit board rates by 0.25% effective Feb 2, the group said last Thursday.


Hacked Tokyo cryptocurrency exchange to return ¥46 billion to coin owners

TOKYO: Tokyo-based cryptocurrency exchange Coincheck Inc said today it would return about ¥46.3 billion (RM1.6 billion) of the virtual money it lost to hackers two days ago in one of the biggest-ever thefts of digital money.

That amounts to nearly 90% of the ¥58 billion worth of NEM coins the company lost in an attack that forced it to suspend on Friday withdrawals of all cryptocurrencies except bitcoin.

Coincheck said in a statement it would repay the roughly 260,000 owners of NEM coins in yen, though it was still working on timing and method.

The theft underscores security and regulatory concerns about bitcoin and other virtual currencies even as a global boom in them shows little signs of fizzling.

Two sources with direct knowledge of the matter said Japan’s Financial Services Agency (FSA) sent a notice to the country’s roughly 30 firms that operate virtual currency exchanges to warn of further possible cyber-attacks, urging them to step up security.

The financial watchdog is also considering administrative punishment for Coincheck under the financial settlements law, one of the sources said.

Japan started to require cryptocurrency exchange operators to register with the government only in April 2017. Pre-existing operators such as Coincheck have been allowed to continue offering services while awaiting approval. Coincheck’s application, submitted in September, is still pending.

Coincheck told a late-Friday news conference that its NEM coins were stored in a “hot wallet” instead of the more secure “cold wallet”, outside the internet. Asked why, company president Koichiro Wada cited technical difficulties and a shortage of staff capable of dealing with them.

In 2014, Tokyo-based Mt Gox, which once handled 80% of the world’s bitcoin trades, filed for bankruptcy after losing around half a billion dollars worth of bitcoins. More recently, South Korean cryptocurrency exchange Youbit last month shut down and filed for bankruptcy after being hacked twice last year.

World leaders meeting in Davos last week issued fresh warnings about the dangers of cryptocurrencies, with US Treasury Secretary Steven Mnuchin relating Washington’s concern about the money being used for illicit activity. – Reuters


Shares of Saudi prince’s firm surge after his release

RIYADH, Jan 28 — Shares in Saudi billionaire Prince Al-Waleed bin Talal’s Kingdom Holding surged today after he was released following three months of detention. The share price of the company, 95 per cent of which is owned by Prince…


Bangladesh signs deal with Indonesia for LNG imports

DHAKA, Jan 28 — Bangladesh signed an agreement with Indonesia today to open talks on imports of liquefied natural gas (LNG), as the South Asian country turns to the supercooled fuel to fill a shortfall of domestic natural gas. A letter of…


Commercial Bank of Qatar in talks about potential loan, say sources

DUBAI, Jan 28 — Commercial Bank of Qatar (CBQ), the Gulf state’s third-largest lender by assets, is in talks with banks about a syndicated loan of up to US$500 million (RM1.9 billion), two sources familiar with the matter told Reuters….


Takaful Malaysia plans new products to boost boost growth

PETALING JAYA: Syarikat Takaful Malaysia Bhd, which reported a 43.4% jump in fourth-quarter net earnings, said it will introduce new product solutions to improve its growth rate.

The group said in a statement that it made significant investments in tools, applications and new technologies to improve operational efficiencies and to enhance the customer experience via its digital strategy with online sales portal, Click for Cover where the first tranche of online products are offered to its customers.

For the fourth quarter ended Dec 31, 2017, Takaful Malaysia’s net profit stood at RM56.3 million, 43.4% higher than the RM39.26 million recorded in the previous corresponding period, while revenue increased 5.5% from RM490.82 million to RM517.74 million.
Its full-year net profit soared 17.3% from RM176.28 million to RM206.7 million, with revenue rising 6.3% from RM2.01 billion to RM2.14 billion.

The group declared an interim single tier dividend of 15 sen per share amounting to RM123.5 million on Dec 18, 2017 in respect of the financial year ended Dec 31, 2017.

“The group’s profit surpassed its target and for the first time exceeded RM200 million since its establishment. This excellent result marks an important milestone for the group as we have been consistently recording an increasing net profit, with cumulative compounded annual growth rate of 27% since the start of our Transformation Programme in 2009,” said Takaful Malaysia group CEO Datuk Seri Mohamed Hassan Kamil.

He added that the group takaful business and general takaful gross contribution grew 20% from the previous financial year to close at RM591 million, mainly derived from the fire and motor classes.


More products from Takaful Malaysia

PETALING JAYA: Syarikat Takaful Malaysia Bhd, which reported a 43.4% jump in fourth-quarter net earnings, said it will introduce new product solutions to improve its growth rate.

The group said in a statement that it made significant investments in tools, applications and new technologies to improve operational efficiencies and to enhance the customer experience via its digital strategy with online sales portal, Click for Cover where the first tranche of online products are offered to its customers.

For the fourth quarter ended Dec 31, 2017, Takaful Malaysia’s net profit stood at RM56.3 million, 43.4% higher than the RM39.26 million recorded in the previous corresponding period, while revenue increased 5.5% from RM490.82 million to RM517.74 million.
Its full-year net profit soared 17.3% from RM176.28 million to RM206.7 million, with revenue rising 6.3% from RM2.01 billion to RM2.14 billion.

The group declared an interim single tier dividend of 15 sen per share amounting to RM123.5 million on Dec 18, 2017 in respect of the financial year ended Dec 31, 2017.

“The group’s profit surpassed its target and for the first time exceeded RM200 million since its establishment. This excellent result marks an important milestone for the group as we have been consistently recording an increasing net profit, with cumulative compounded annual growth rate of 27% since the start of our Transformation Programme in 2009,” said Takaful Malaysia group CEO Datuk Seri Mohamed Hassan Kamil.

He added that the group takaful business and general takaful gross contribution grew 20% from the previous financial year to close at RM591 million, mainly derived from the fire and motor classes.


Maybank revises base rate upwards to 3.25pc from tomorrow

KUALA LUMPUR, Jan 28 — Maybank will be revising upwards its base rate (BR) to 3.25 per cent per annum from three per cent per annum and base lending rate to 6.90 per cent per annum from 6.65 per cent per annum effective tomorrow. Maybank in a…