Biggest losers would be banks with a high mix of variable loans and CASA, low non-interest income ratio and low percentage exposure to the overseas market. Alliance Bank Bhd and BIMB Holdings Bhd are set to lose most in a falling interest rate climate, according to HLIB Research's sensitivity analysis.
Affin Bank Bhd and AMMB Holdings Bhd are least affected by the Overnight Policy Rate (OPR) cut.
HLIB Research explained that the impact of an OPR cut on banks is largely dependent upon the composition of variable and fixed rate loans; the proportion of current account, savings account (CASA) and other deposits; non-interest income ratio; as well as percentage exposure to overseas market.
"Biggest losers would be banks with a high mix of variable loans and CASA, low non-interest income ratio and low percentage exposure to overseas market."
Meanwhile, PublicInvest Research said Alliance Bank and RHB Bank Bhd would seem to be the worst hit by the rate cut given their higher proportion of variable rate loans (over total loans) of 89.9% and 85.7% respectively.
"Impact could be smallest for AmBank (74.3%), Maybank (71.6%) and Affin Bank (67.2%)."
On the liability front, the research house said Maybank, Public Bank Bhd and Alliance Bank's lower levels of fixed-rate deposits allows it to re-price faster, standing it in better stead even though Alliance Bank's high level of variable-rate loans will cause its margins to compress more.
Meanwhile, HLIB Research highlighted that the previous rate cut only resulted in a marginal negative net interest margin (NIM) impact and there could be a chance that NIM pressure could be mitigated by less intense deposit competition.
It noticed that high promotional fixed deposit rate campaigns have abated, indicating that banks are wary of the situation and started to price in lower interest rates.
PublicInvest Research expects the impact of the cuts to vary significantly to the banks under its coverage. It estimated that Alliance Bank to be the hardest hit with 5% knocked off its bottom line on a full-year basis.
"Maybank and CIMB Group are anticipated to see about 2.5% shaved off, with AmBank taking an estimated 2.0% hit. The industry-wide impact is anticipated at about 3%."
It said despite relatively benign impacts to net profit, banking stocks may still take near-term hits as seen in previous rounds of cuts.
"We see this as opportunities to accumulate nonetheless, with longer-term effects likely to be shrugged off by gradual improvements in macro conditions. While we maintain our neutral view on the sector, it is with a positive bias given the sector's lagging valuations to the broader market."