CGS-CIMB: Our economists now expect an end-2020 OPR of 1.75% , which implies no more OPR cuts for the rest of the year.
A cut in the key benchmark interest rate would have impacted net interest margin of banks, resulting in lower earnings. CGS-CIMB Equities Research said it estimated that every 25bps OPR cut would lower banks’ financial year 2021 forecast net profits by around 2%. “Our economists now expect an end-2020 OPR of 1.75% , which implies no more OPR cuts for the rest of the year.“On a preliminary basis, we estimate this could potentially lead to 1%-2% upgrades in our net profit forecasts for banks.
For 2020, it expects the sector’s NIM to be compressed by 14bps while a flat interest margin, on average, is expected for 2021.
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