KUALA LUMPUR: Hong Leong Bank Bhd (HLB) and Hong Leong Islamic Bank Bhd (HLISB) will be reducing the base rate (BR) and Islamic Base Rate (IBR) to 2.88 per cent from 3.38 per cent in line with Bank Negara Malaysia's reduction in Overnight Policy Rate (OPR) by 50 basis points (bps).
Both banks said loans and financing based on the base lending rate (BLR) and Islamic Financing Rate (IFR) will be lowered to 5.89 per cent from 6.39 per cent.
The board rates of its fixed deposits will be revised lower by 50 bps as well.
The banking group said all rate changes will be effective from May 12, 2020.
HLB group managing director and chief executive officer Domenic Fuda said the bank is optimistic that the domestic economy will adjust to this 'new normal' way of life, despite operating under a Conditional Movement Control Order (CMCO).
"This allows nearly all economic sectors to resume work albeit with specific protocols being observed by each industry.
"With public confidence that enough progress has been made in flattening the curve and the trust that our healthcare system can cope with the outbreak, plus the support of both monetary and fiscal measures should prove crucial to help borrowers move from the containment to the recovery phase and rebound quickly from the recent economic lockdown," he said in a statement today.
In early February, the bank had initiated Customer Financial Relief Plan to support small medium enterprises (SMEs) and customers affected by the Covid-19 outbreak.
This includes restructuring or rescheduling their loans and financing to help their cash-flow situation and ease the financial burden of both SMEs and households.
The bank had also structured its six-month loan deferment program to comply with the Bank Negara, while providing maximum flexibility to its customers.
"Beyond the rate cuts and loan deferment programs, we have been proactively working with our clients to help wherever we can with their recovery and rebound phases.
"We are here to provide the financial support needed to restart operations or assist with opportunities that might arise or help with funds needed to strengthen their businesses digitally, which has we all know, is extremely important in the new normal way of life," added Fuda.
Meanwhile, Bank Islam Malaysia Bhd (Bank Islam) has revised its BR by 50 bps from 3.27 per cent to 2.77 per cent per annum, while its base financing rate was adjusted from 6.22 per cent to 5.72 per cent per annum.
The bank's deposit rates will also be adjusted downwards by 50 bps and all rate changes will take effect from May 12, 2020.
Bank Islam chief executive officer Mohd Muazzam Mohamed said the bank will be strategising to balance its funding portfolio to be more cost-effective to mitigate its net income margin (NIM) compression.
"While the cut will no doubt affect our financial income, it is done with our customers in mind. The Bank will continue to help society back on their feet during this difficult time and we will keep on supporting the economy to normalise," he said in a statement today.
He said Bank Islam is prepared for any eventuality caused by the OPR cut and will continue to focus on diversifying its revenue streams, especially in the fee-based income segment.
"While we continue to remain resilient and cautious, we have already put in place strategies to move forward during this challenging period.
"We will be leveraging on technological advancements, and implement selected digitalisation initiatives to drive further operational efficiencies, lending additional support to long-term profitability and overall viability.
"We recognise this effort as the 'new norm' and will strive in optimising values and resources towards sustainability and wellbeing for our customers, stakeholders, and the bank," added Mohd Muazzam.
The last revision in Bank Islam's BR was on March 6, 2020, when it was revised from 3.52 per cent to 3.27 per cent, while BFR was reduced from 6.47 per cent to 6.22 per cent.