KUALA LUMPUR, May 6 — Several financial institutions have increased their base rate (BR) ahead of Bank Negara Malaysia’s review of the overnight policy rate (OPR), according to industry sources.

Higher interest results directly in more expensive loan installments for any borrowings that are not based on fixed rates.

According to the New Straits Times, Putra Business School associate professor Dr Ahmed Razman Abdul Latiff said the increase was unfair to the public and showed that banks were only interested in profits.

“The banks do not really care what will happen to the borrowers so long as they can pay.

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“An abnormally high-interest rate is a symptom of a financial crisis. Even though the hike is noticeably low, borrowers and the public alike must take precautions,” he said, stating further that the only risk the banks were willing to handle was clients defaulting on their loans.

The newspaper also reported that some banks have increased the rates without direct notice to consumers, but acknowledged that this was not required.

NST also said some banks have declined to confirm or deny that they have raised their BR.

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An Affin Bank spokesman confirmed that it raised the BR to 4.2 per cent from 4.1 per cent effective April 15, stating it was line with the bank's internal funding position.

“The revision is due to an increase in our fixed deposit rates for 12 months and more, thereby affecting the change, based on the base rate methodology.” said the spokesman.

Alliance Bank Bhd group chief executive officer Joel Kornreich said his bank has no current plans to increase its lending rate.

CIMB Group Holdings Bhd did not disclose if it has raised its base rate but stated that it did not expect changes this month.

Public Bank Bhd Managing director and chief executive officer Tan Sri Tay Ah Lek said a lower BR would only have a small impact on the bank's performance but also did not disclose if it will raise their lending rate

“The temporary impact will be due to the time lag on the repricing of fixed deposits,” he said.

In 2017, the base lending rate (BLR) system was replaced by the BR that allowed banks to independently set their interest rates for loans based on their own borrowing costs and statutory reserve requirements.

Some economists have predicted that BNM could lower interest rates during the May review to stimulate the economy that was in disinflation for the first two months of the year.