KUALA LUMPUR, July 8 — Hong Leong Bank (HLB) and Hong Leong Islamic Bank will be reducing its base rate (BR), Islamic base rate (IBR), base lending rate (BLR) and Islamic financing rate (IFR), effective July 10, in line with the Bank Negara Malaysia’s (BNM) move to cut the overnight policy rate by 25 basis points (bps) to 1.75 per cent yesterday.

The bank said it would be reducing the BR and IBR to 2.63 per cent from 2.88 per cent while the BLR and IFR would be lowered to 5.64 per cent from 5.89 per cent.

"Similarly, the board rates of its fixed deposits will be revised lower by 25 bps as well,” it said in a statement today.

Group managing director and chief executive officer Domenic Fuda said the journey to recovery and rebuilding resiliency in the business and household sectors would take some time despite the easing of restrictions and businesses as well as social activities moving back towards pre-movement control order (MCO) period.

"Cash flow remains a serious concern especially for certain sections of the business community and households which are continuing to deal with a heavy blow to their finances amidst the weaker economy, job losses and employment prospects,” he said.

Nevertheless, he said HLB is encouraged by the reasonable recovery it is seeing in business activities since the Recovery MCO, both within its corporate and SME clients.

"However, the recovery is not even and there are some businesses and households that continue to experience cash flow issues and this further reduction in interest rates will provide additional stimulus to accelerate the pace of the economic recovery in the second half of 2020,” he said.

Meanwhile, in a separate research note, Maybank Investment Bank said BNM’s OPR cut yesterday has brought the total tally to 125 bps cut for this year due to the global economic uncertainty from Covid-19 pandemic.

"Factoring in the OPR reduction would impact our financial year 2020/2021 estimated aggregate earnings by just three per cent or one per cent respectively, which is negligible.

"We believe that the rate cuts will take a pause after this for the rest of the year,” it said.

At 3pm, finance stocks were up 1.22 per cent led by Maybank and Public Bank which has been on a rally since the beginning of the week. — AFP