KUALA LUMPUR: AMMB HOLDINGS BHD [] said it would not cut profit margins to gain market share in the mortgage business.
"Competition is key but we are not one of those that offer cut-throat rates to get the business. We are cautious on the profitability," said group managing director Cheah Tek Kuang.
Cheah said lower rates were usually given to bank's customers with good business, potential cross-selling of other products and credibility on a case-to-case basis.
It is understood that the bank offers mortgages at the base lending rate (BLR) of '2.3 per cent, which is among the lowest loan rate in the country. The current BLR rate is 6.3 per cent.
The BLR is measured against the overnight policy rate (OPR). This year, Bank Negara Malaysia has raised the OPR by 75 basis points in three rounds of rate hike to 2.75 per cent.
On the possibility of Bank Negara imposing a lower mortgage loan-to-value (LVR) ratio, Cheah said such a move was common in countries like Hong Kong and Singapore, which has limited land for development.
In Singapore, the LVR for those who has more than one mortgage can only borrow up to 70 per cent as against 80 per cent previously while in Hong Kong the LVR has been brought down to 60 per cent from 70 per cent previously for the second loan.
"In Malaysia we don't have issue of land scarcity. So, you can't have a hard-and-fast rule," he said, adding that depending on the bank's risk appetite and customer's credibility, there should be some exceptions.
Bank Negara is reported to have written to financial institutions to get feedback on the possibility of capping the LVR for mortgages at 80 per cent to avert the risk of a potential property bubble.
Currently, banks can usually lend up to 90 per cent of the house value or up to 100 per cent in selected cases, which has been handy for developers promoting their newly launched under interest absorption schemes like 10/90 home loan schemes.
Kenanga Research in a research note on Monday said it would not be surprised if Bank Negara implements the 80 per cent cap on the mortgage LVR, at least for PROPERTIES [] more than RM500,000, as the government is clamping down on investment related property acquisitions.
However, Cheah said the central bank has all the necessary figures that it needed to assess the market and to "be fair to them, they have to ensure an orderly market condition".
Therefore, he said, Bank Negara from time to time does have consultations with the industry for the betterment of the sector.
On another issue, AMMB chief financial officer Ashok Ramamurthy, who is also deputy group managing director, said the bank has no plans to raise capital.
He said the bank always ensured that its balance sheet was positioned for rising interest rates.
On the interest rate outlook in Malaysia, Ashok said if the country's economy continued to grow rapidly as in the first half of the year, it may put some pressure on interest rates. ' Bernama
"Competition is key but we are not one of those that offer cut-throat rates to get the business. We are cautious on the profitability," said group managing director Cheah Tek Kuang.
Cheah said lower rates were usually given to bank's customers with good business, potential cross-selling of other products and credibility on a case-to-case basis.
It is understood that the bank offers mortgages at the base lending rate (BLR) of '2.3 per cent, which is among the lowest loan rate in the country. The current BLR rate is 6.3 per cent.
The BLR is measured against the overnight policy rate (OPR). This year, Bank Negara Malaysia has raised the OPR by 75 basis points in three rounds of rate hike to 2.75 per cent.
On the possibility of Bank Negara imposing a lower mortgage loan-to-value (LVR) ratio, Cheah said such a move was common in countries like Hong Kong and Singapore, which has limited land for development.
In Singapore, the LVR for those who has more than one mortgage can only borrow up to 70 per cent as against 80 per cent previously while in Hong Kong the LVR has been brought down to 60 per cent from 70 per cent previously for the second loan.
"In Malaysia we don't have issue of land scarcity. So, you can't have a hard-and-fast rule," he said, adding that depending on the bank's risk appetite and customer's credibility, there should be some exceptions.
Bank Negara is reported to have written to financial institutions to get feedback on the possibility of capping the LVR for mortgages at 80 per cent to avert the risk of a potential property bubble.
Currently, banks can usually lend up to 90 per cent of the house value or up to 100 per cent in selected cases, which has been handy for developers promoting their newly launched under interest absorption schemes like 10/90 home loan schemes.
Kenanga Research in a research note on Monday said it would not be surprised if Bank Negara implements the 80 per cent cap on the mortgage LVR, at least for PROPERTIES [] more than RM500,000, as the government is clamping down on investment related property acquisitions.
However, Cheah said the central bank has all the necessary figures that it needed to assess the market and to "be fair to them, they have to ensure an orderly market condition".
Therefore, he said, Bank Negara from time to time does have consultations with the industry for the betterment of the sector.
On another issue, AMMB chief financial officer Ashok Ramamurthy, who is also deputy group managing director, said the bank has no plans to raise capital.
He said the bank always ensured that its balance sheet was positioned for rising interest rates.
On the interest rate outlook in Malaysia, Ashok said if the country's economy continued to grow rapidly as in the first half of the year, it may put some pressure on interest rates. ' Bernama
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