Malaysian banks' base rates unlikely to rise

OCBC Malaysia and UOB Malaysia are merely normalizing their rates.

Maybank Kim Eng reports that OCBC Malaysia raised its BR to 3.99% from 3.92% with effect from 2 Jan 2016 while UOB Malaysia raised its BR effective 8 Jan, to 4.00% from 3.89%.

The analyst notes that there is no rising trend in the base rates as the two banks are merely normalizing their BRs to the levels set on 2 Jan 2015, when the BR was first introduced. Back then, UOB and OCBC’s BRs were 4.02% respectively, so current levels are still a tad lower.

"When the BR was first set back in 2 Jan 2015, the 3M KLIBOR was at a high of about 3.86%, and it then dipped by about 17bps to a low of 3.69% in June-Aug 2015. Since then, the 3M KLIBOR has climbed back to 3.84%, ie close to the Jan 2015 level, reflecting some tightness in liquidity. We believe the normalization in UOB and OCBC’s BRs reflect this rise in the KLIBOR," adds Maybank Kim Eng.

The analyst adds that BRs of local banks are unchanged from when they were first introduced, with Maybank and Public Bank’s BRs being the lowest at 3.25% and 3.65% respectively, and at about 4% for the other banks.

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