RHB: Our financing products reasonably priced, we'll be guided by Bank Negara on cheaper housing loans

KUALA LUMPUR: RHB Bank Bhd believes that its financing products are reasonably priced at the moment given that the government has last week proposed to reduce housing loan interest rates to address the issue of unaffordable housing.
RHB group managing director Datuk Khairussaleh Ramli, in response to a query whether it will increase its base rate should the proposal go through, said: “As a lender, we have to reflect what we believe is reasonable and cover our costs. We believe at this time, what we offer, for all kinds of financing, is reasonable.”
He was speaking at a press conference after launching RHB Corporate MyDebit Card here Monday.
The proposal to cut housing loan interest rates was initially tabled by the National Housing Department and would need the approval of the Cabinet and Bank Negara Malaysia (BNM) for it to go through.
On whether RHB is receptive to the government’s move to reduce housing loan interest rates, Khairussaleh said: “We’ll be guided by BNM. We’ve a certain framework in terms of how we offer our financing and we will continue with that. In terms of impacting our costs, it’s reasonable for us to generate a reasonable rate of return.”
RHB acting head of group retail banking Nazri Othman said housing loans comprise about 60% of its retail banking portfolio.
“We’ve to manage the business in terms of what makes sense for us. If there’s a requirement for us to reduce it (housing loan interest), we will do so because it’s a regulatory requirement. We have to manage this business so that we as a bank continues to deliver what we’re supposed to deliver to shareholders,” said Nazri.
The proposal will also “tie in” with the Malaysian Financial Reporting Standards 9 (MFRS 9), effective Jan 1, 2018, which requires banks to make provisions for expected credit losses.
Nazri explained that under the new accounting treatment all financing products will be affected. However, the degree varies, with unsecured products likely to bring with them higher provisions. Secured products constitute hire purchase and housing loans, which are tied to a collateral.
RHB will be announcing its new base rate next week, in line with the increase in Bank Negara’s Overnight Policy Rate last Thursday.
“While we can increase our base finance rate and base lending rate, we will also have to correspondingly raise our deposit rates. It’s a small positive,” said Khairussaleh.
Earlier, RHB and RHB Islamic Bank Bhd unveiled RHB Corporate MyDebit Card, which it aims to issue to 5% of its 300,000 SME and corporate customers this year. The product is an initiative to reduce cheques and cash payments at major government agencies, mainly the Inland Revenue Board, Employees Provident Fund, Social Security Organisation and Customs Department.
RHB Corporate MyDebit Card under the MyDebit Scheme is meant for business payments made to local government agencies. Corporate customers of RHB Bank and RHB Islamic can now enjoy the convenience of making payments to government agencies using RHB Corporate MyDebit Card at all RHB Bank and RHB Islamic branches nationwide.