ID :
146004
Wed, 10/13/2010 - 17:25
Auther :
Shortlink :
https://oananews.org//node/146004
The shortlink copeid
BUDGET: EXPECT TIGHTER REGULATIONS FOR CREDIT CARD & PROPERTY SECTOR
KUALA LUMPUR, Oct 13 (Bernama) –- The Malaysian Government is expected to
adopt tighter regulations in the 2011 Budget to curb potential dangerous run-up
in consumer credit card spending and speculative activities in the property
market.
“We believe Bank Negara Malaysia (BNM) is focusing on tackling household
debt in 2011 to promote healthy credit card spending,” said Kenanga Research.
In its 2011 “Wish List”, Kenanga said the central bank should consider
imposing tighter borrowing limit for the property sector to avert potential
over-leveraging on the household segment and speculations.
It said bank loans should be lowered to between 70 and 80 per cent value
ratio for third mortgage, it said.
Bank Negara should also consider capping maximum of two mortgages for each
borrower, it said, adding that such a rule would slow down housing price
appreciation rate, going forward.
Should tighter borrowing rules be enforced in 2011, it would not have any
impact on loan growth this year as borrowings are anticipated to remain strong
till year-end, it said.
“But we are cautiously optimistic on business loans as businesses in the
next six months may be negatively impacted by global economic turmoil and
Malaysia's economy is not immuned from moderating global growth,” it said.
The research house said it was cautious for the second half of this year due
to healthy loan growth but increasing risk on slower growth in the business
segment, namely manufacturing and exports.
"Profit margin squeeze is directly triggered by the wave of intensely-
competitive pricing, moderate growth expectation and possibility of a slowdown
on mortgages if 70 per cent to 80 per cent loan-to-value ratio (LVR) is
implemented.
“We see the implementation of a blanket 70 per cent to 80 per cent LVR cap
as a real challenge to the industry's loan growth next year and could put
pressure on retail banks,” it said.
However, strong asset quality suggested lower credit charge-off, going
forward, compensating net profit for the lower top line growth, it said.
As for credit cards, Kenanga said new measures should see tougher limits on
the number of cards a person could hold and lower credit limit on each card.
Bank Negara should restrict a consumer to own only two credit cards from two
banks of their choice and allow people with an annual income of above RM24,000
(US$1=RM3.08) to own a credit card from the current minimum requirement of
RM18,000.
The central bank should also reduce spending limit by 1.5 times their
monthly salary (currently 2.5-3.0 times), set at the bank’s discretion for
first-time applicants.
“In our view, stricter credit card rules are prudent and limit the risk of
rising household non-performing loans. It will curb spending-spree cultures that
have surfaced in certain segments of the population recently,” it added.
adopt tighter regulations in the 2011 Budget to curb potential dangerous run-up
in consumer credit card spending and speculative activities in the property
market.
“We believe Bank Negara Malaysia (BNM) is focusing on tackling household
debt in 2011 to promote healthy credit card spending,” said Kenanga Research.
In its 2011 “Wish List”, Kenanga said the central bank should consider
imposing tighter borrowing limit for the property sector to avert potential
over-leveraging on the household segment and speculations.
It said bank loans should be lowered to between 70 and 80 per cent value
ratio for third mortgage, it said.
Bank Negara should also consider capping maximum of two mortgages for each
borrower, it said, adding that such a rule would slow down housing price
appreciation rate, going forward.
Should tighter borrowing rules be enforced in 2011, it would not have any
impact on loan growth this year as borrowings are anticipated to remain strong
till year-end, it said.
“But we are cautiously optimistic on business loans as businesses in the
next six months may be negatively impacted by global economic turmoil and
Malaysia's economy is not immuned from moderating global growth,” it said.
The research house said it was cautious for the second half of this year due
to healthy loan growth but increasing risk on slower growth in the business
segment, namely manufacturing and exports.
"Profit margin squeeze is directly triggered by the wave of intensely-
competitive pricing, moderate growth expectation and possibility of a slowdown
on mortgages if 70 per cent to 80 per cent loan-to-value ratio (LVR) is
implemented.
“We see the implementation of a blanket 70 per cent to 80 per cent LVR cap
as a real challenge to the industry's loan growth next year and could put
pressure on retail banks,” it said.
However, strong asset quality suggested lower credit charge-off, going
forward, compensating net profit for the lower top line growth, it said.
As for credit cards, Kenanga said new measures should see tougher limits on
the number of cards a person could hold and lower credit limit on each card.
Bank Negara should restrict a consumer to own only two credit cards from two
banks of their choice and allow people with an annual income of above RM24,000
(US$1=RM3.08) to own a credit card from the current minimum requirement of
RM18,000.
The central bank should also reduce spending limit by 1.5 times their
monthly salary (currently 2.5-3.0 times), set at the bank’s discretion for
first-time applicants.
“In our view, stricter credit card rules are prudent and limit the risk of
rising household non-performing loans. It will curb spending-spree cultures that
have surfaced in certain segments of the population recently,” it added.
