Profit of banks forecast to fall 14.4% on waiver

The Finance Ministry said on Wednesday that banks have agreed to waive the interest on HP loans during the deferment period and HP borrowers would continue to pay the same monthly instalments after the moratorium period.

PETALING JAYA: The move by banks not to charge additional interest on hire-purchase (HP) loans for the six-month moratorium period may lower banks’ financial year (FY) forecast net profit for this year and next year by 14.4%.

CGS-CIMB research said banks would have to provide for a Day-1 modification loss in the second quarter, which could total RM4bil or 2.4% of the total HP loans of RM165.3bil in the industry. “Applying the same percentage of 2.4% to the HP loans of individual banks, we estimate that the modification loss would reduce banks’ FY20-FY21 forecast net profit by 14.4%, ” it said.