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By Mihar Dias (C) Copyright May 2023
The latest hikes in OPR will likely offer banks a net profit of RM1 billion.
According to HLBB analysts, the latest hike would push up the net forecasted profit to be made by financial institutions to 3.7% or a little above RM1 bil to RM30.07 bil from RM28.99 billions.
Only Lim Guan Eng (LGE) has enough guts to lambast BNM for hiking overnight policy rate (OPR) by 25 basis points (bps) to 3%.
LGE declared that hikes in OPR only benefitted the banking sector, not the people.
So, why is LGE alone talking about OPR?
Why is the cabinet silent? We would like to hear from members of the cabinet on what they think about increase in OPR at this juncture, which makes it difficult for the young to get their loans.
LGE is qouted as saying there is no reason for BNM to increase the OPR now "When the core inflation has been slowly reined. Despite BNM not hiking up the OPR in January and March this year, both headline inflation and core inflation dropped to a 34-month low of 3.4% and 3.8% respectively in March 2023. The hikes in OPR have benefitted no one except the banks,” he said and is quoted by NST.
“Have banks not earned enough?” asked LGE.
On May 3, BNM raised the OPR by 25 bps from 2.75% to 3%. The central bank had earlier paused its rate hike cycle in January and March after raising it by 100bps or 1% last year as inflation surged following the COVID-19 pandemic and the of Russian-Ukrainian conflict.
In an earlier statement announcing the latest OPR hike in May, BNM said it will continue to ensure that the monetary policy stance remains consistent with the outlook of domestic inflation and growth. (May 24, 2023).
This prompted a former banker in our breakfast group dubbed the "thought criminals" to say, " What an unenviable position we're in now. BNM raises OPR to strengthen MYR, but it hurts the rakyat," says Rais, a former banker.
However, if you were to maintain the OPR, MYR suffers, so would the rakyat. Will LGE offer a solution instead of just critising?
Anyway, we applaud LGE irrespective of what the above member of the thought criminals discourse has to.
At least, LGE has the guts to question BNM's latest move.
Not many MPs dare challenge the central bank that seems to favour commercial banks and allow them to make one billion ringgit projected profit in the next 12 months.
Yes, LGE, you are quite right when you say, haven't they earned enough already without having to squeeze a billion more for themselves?
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