Which banks are expected to see the biggest NIM expansion?

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Bank Islam Malaysia, Affin Bank, and Alliance Bank Malaysia are projected to experience the most significant net interest margin (NIM) expansion.

RHB Research's analysis indicates that Bank Islam Malaysia (BIMB), Affin Bank, and Alliance Bank Malaysia (ABMB) are positioned to benefit the most from net interest margin (NIM) expansion and subsequent earnings growth. This projection is based on the anticipated impact of overnight policy rate (OPR) adjustments on their net interest income.
Estimated NIM Expansion from OPR Hikes

Guidance suggests that a 25 basis points (bps) increase in the OPR, sustained over 12 months, is estimated to lift NIMs by 4.0-5.0bps for both Affin Bank and Alliance Bank Malaysia. Bank Islam Malaysia is expected to see a slightly higher expansion, in the range of 5.0-6.0bps under the same conditions. These figures are crucial in understanding the direct correlation between monetary policy shifts and the profitability of these financial institutions.
Projected Net Profit Improvement

Calculations derived from the anticipated NIM expansion point towards a notable increase in net profit for the targeted banks. RHB Research's assessment indicates a potential net profit improvement of approximately three per cent for Affin Bank and Alliance Bank Malaysia. Bank Islam Malaysia, due to its higher projected NIM expansion, could see its net profit rise by around five per cent.
Impact on Larger Banking Institutions

While the focus is on BIMB, Affin Bank, and ABMB, larger banks are also expected to experience NIM expansion, albeit to a lesser extent. For these larger institutions, a NIM expansion of 2.0-4.0bps is projected, which would translate into an earnings increase of 1.0-2.0 per cent. This demonstrates a tiered impact of OPR hikes across different segments of the banking sector.

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Which banks are expected to see the biggest NIM expansion?

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