Will Bank Islam benefit most from OPR hikes?

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Bank Islam is Expected to Be the Largest Beneficiary of Overnight Policy Rate Hikes

Bank Islam Malaysia Bhd (BIMB) is projected to experience the most significant benefits from increases in the Overnight Policy Rate (OPR). This is largely attributed to its substantial proportion of floating-rate loans within its financing portfolio.
High Proportion of Floating-Rate Loans

BIMB exhibits the highest ratio of floating-rate loans in the sector, standing at 91.3 per cent for the financial year 2023 forecast (FY23F). This characteristic makes the bank particularly sensitive to changes in the OPR, as its interest income from these loans will adjust more directly with rate movements.
Projected Net Profit Increase from OPR Hikes

An increase of 25 basis points (bp) in the OPR is estimated to boost BIMB’s net profit for FY23F by 7.1 per cent. This anticipated impact is the most pronounced among its peers in the banking sector, underscoring its advantageous position in an environment of rising interest rates.
Expected Core Net Profit Growth

Beyond the direct impact of OPR hikes, CGS-CIMB Securities Sdn Bhd forecasts a recovery in BIMB’s core net profit growth. This is projected to be 2.5 per cent in FY2022 forecast and a substantial 30.5 per cent in FY23F. The growth is primarily driven by an anticipated reduction in loan loss provisioning and a rise in net financing income.

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Will Bank Islam benefit most from OPR hikes?

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