PETALING JAYA (Nov 20, 2013): A new Bank Negara Malaysia (BNM) ruling that requires banks to give out property loans based on net selling price, which excludes rebates and discounts, rather than gross selling price may affect loans growth for banks this year, Alliance Research Sdn Bhd said.
Its analyst Cheah King Yoong said a BNM circular sent out to banks last Friday announced not only the expected ban on the developers interest bearing scheme (DIBS) and the interest capitalisation scheme (ICS), but also an unexpected rule for all banks to determine their loan-to-value (LTV) ratio based on net selling price rather than gross selling price.
Banks can no longer provide financing for projects approved by authorities with DIBS on or after Nov 15, 2013 effective immediately. While those projects approved before Nov 15 have until Jan 1, 2014 before the prohibition is effected.
“We currently project 2014 loan growth target of 9%, supported by stronger growth of business loans stemming from the ongoing implementation of Entry Point Projects under the government’s Economic Transformation Plan, which is expected to fill up the vacuum left by the moderation in household loans. However, in light of the more onerous property lending curb, we will be reviewing this target,” Cheah said in a note to clients yesterday.