KUALA LUMPUR, July 8 (Bernama) -- RHB Research expects Bank Negara
Malaysia's measures to curb rising household debt to encourage
responsible lending on uncollateralised financing.
Source from (Bernama): http://www.bernama.com/bernama/v7/bu/newsbusiness.php?id=961742
Published: July 09, 2013
Last Friday, the central bank announced that has will implement, with
immediate effect, a set of measures to curb the rising trend of
household indebtedness and reinforce responsible lending practices by
key credit providers.
Among the measures were limiting maximum tenure of personal loans to 10
years and property financing to 35 years, and prohibition on the
offering of pre-approved personal financing products.
Also included was the setting of prudent debt service ratio that
allowed sufficient buffer to deal with income volatility and other
costs.
"We are of the view that this moderation is a positive move towards
inculcating more responsible lending or borrowing in personal financing
(PF), and may address the build-up in leverage, which reduces the buffer
to any income shock," it said in a research note Monday.
RHB Research said the impact on the new policy would be felt more
intensely by non-bank financial institutions (NBFI), which are more
heavily dependent on PF.
"We see a greater impact on NBFIs, which rely heavily on PF.
"We also see a marginal impact on life insurers with bancassurance exposure to mortgages and PF," it added.
RHB Research has downgraded the fair values of Malaysian Building
Society Bhd and Aeon Credit to RM3.10 and RM15.10, respectively, which
have been trading at premium valuations.
-- BERNAMA
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