KUALA LUMPUR: OSK Research said market speculation has it that Bank Negara Malaysia (BNM) may increase banks' statutory reserve requirement (SRR) from 1% to 2% at Friday, March 11 monetary policy meeting but it did not expect an impact from a hike in the SRR due to the firm loans growth.
The research house said on Friday although this is intended to soak up excess liquidity from the system, raising the SRR from a record low is unlikely to have any visible impact on credit growth, just as the increase in interest rates from record lows in early 2010 did not have the effect of squeezing loans growth.
OSK Research said in fact, the industry loans growth of 13% implies a significant upside bias to our and the market's 2011 loans growth forecast of 9% to 10%.
'We believe that as long as economic conditions are conducive and the system's loans to deposit ratio (LDR) remains below 90%, loans growth should remain stable at 1.5x to 1.6x GDP growth, or 9% to 11%, irrespective of any potential SRR increase.
'We think that net interest margins pose a more critical challenge than loans growth. Maintain OVERWEIGHT on the sector,' it said.
The research house said on Friday although this is intended to soak up excess liquidity from the system, raising the SRR from a record low is unlikely to have any visible impact on credit growth, just as the increase in interest rates from record lows in early 2010 did not have the effect of squeezing loans growth.
OSK Research said in fact, the industry loans growth of 13% implies a significant upside bias to our and the market's 2011 loans growth forecast of 9% to 10%.
'We believe that as long as economic conditions are conducive and the system's loans to deposit ratio (LDR) remains below 90%, loans growth should remain stable at 1.5x to 1.6x GDP growth, or 9% to 11%, irrespective of any potential SRR increase.
'We think that net interest margins pose a more critical challenge than loans growth. Maintain OVERWEIGHT on the sector,' it said.
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