THE recent cut in banks' reserve requirements is likely to keep net interest margins (NIMs) elevated in the short term, the Maybank Investment Banking Group said.
THE recent cut in banks' reserve requirements is likely to keep net interest margins elevated in the short term, the Maybank Investment Banking Group said.The Bangko Sentral ng Pilipinas' reduction of banks' reserve requirement ratio is effective October 25.The reserve requirement for universal and commercial banks, and nonbank financial institutions with quasi-banking functions will be slashed by 250 basis points to 7.0 percent, 200 points to 4.
Hence, the recent 250-basis-point cut is expected to result in a 10-12 basis-point improvement in NIMs, potentially raising net interest income by 2.0 to 3.0 percent, assuming other factors remain unchanged.'Our top pick in the banking sector is BDO as it would likely benefit an acceleration in loan growth in 2025 on lower rates, coupled by potentially more upcoming PPPs ,' Maybank said.
Cuts To Keep Net Interest Margins Up
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