HSBC

Reference is made to the letter-to-editor titled “Fixed deposits calculation rate differs” published in The Star on 13 October 2015. We would like to respond for and on behalf of our 13 Council banks*.

Having checked with our Council banks, all 13 banks confirmed that interest is paid on fixed deposits where the maturity date falls on a public holiday and/or weekend. One bank has even highlighted that it provides weekend banking and real time fixed deposit placements/redemptions via internet banking.

Be that as it may, we wish to highlight that generally, any funds uplifted from a fixed deposit account before the maturity date may be subject to loss of interest, depending on the terms and conditions as stipulated by the bank concerned. Thus, where the fixed deposit has been rolled-over on Sunday 4 October and then up-lifted on Monday 5 October in the illustration provided, the bank may regard the upliftment as having been made before the next maturity date. Under the circumstances, no interest will be payable for those two days.

We also wish to advise that with the advent of the Competition Act 2010 each member bank makes its own decisions with regard to pricing, tariffs, rates, charges or fees independently and with reference to its own business strategies. Our member banks have been duly informed of the same. Consumers are thus encouraged to compare and “shop” for banks which are better suited for their banking needs.

We would like to urge the writer, JK, to contact ABM to provide us with further details of the bank in question so that we may better check with the bank on the issue raised.

Members of the public are welcomed to contact us at our ABMConnect hotline by dialing 1-300-88-9980, or emailing us at eABMConnect by logging on to our website, www.abm.org.my.

*Our 13 Council Banks comprise Malayan Banking Berhad, Affin Bank Berhad, Alliance Bank Malaysia Berhad, AmBank (M) Berhad, CIMB Bank Berhad, Citibank Berhad, Hong Leong Bank Berhad, HSBC Bank Malaysia Berhad, OCBC Bank (Malaysia) Berhad, Public Bank Berhad, RHB Bank Berhad, Standard Chartered Bank Malaysia Berhad, and United Overseas Bank (Malaysia) Bhd.

Kuala Lumpur, Monday, 9 November 2015:- The Association of Banks in Malaysia (ABM) wishes to clarify with reference to a recent report on Malaysian banks’ foreign currency denominated liabilities.

We are of the respectful view that the position of the foreign currency deposits in the banking system does not pose concerns on the country’s banking system stability. The foreign currency denominated liabilities and assets of Malaysian banks have expanded in line with firstly, the domestic banks' regional operations as well as their regional trade activities and secondly, their centralised liquidity management.

Additionally, these liabilities do not represent immediate claims on Malaysia's international reserves as foreign currency liabilities are generally well covered with foreign currency external assets, including overseas assets, lending and investment in debt securities.

Banks have proactively managed foreign exchange risk and foreign currency funding risks through robust internal controls, contingent funding plans and foreign currency funding programmes. We are given to understand that there is no dependence on external or cross-currency funding for operations in Malaysia. As a matter of fact, many, if not, most banks in Malaysia practise the same asset liability management as they would do with regard to their Ringgit exposure.

While some residents have recently increased their foreign currency deposits due to the depreciation in ringgit for reasons such as immediate business needs and children's education, we wish to highlight that the Malaysian banking system’s foreign currency deposits remain relatively small at about 7 percent of total deposits. Meanwhile, according to Bank Negara Malaysia’s recent Monthly Statistical Bulletin, total non-resident deposits (in both Ringgit and foreign currency) amounted to about RM70 billion, but make up to only about 4% of total banking system deposits.

Turning to our country’s foreign reserves cover, Bank Negara Malaysia recently announced that Malaysia’s international reserves at US$94 billion remain adequate to facilitate international transactions without disruptions. It is sufficient to finance 8.7 months of retained imports, significantly higher than the international benchmark of 3 months of imports. The international reserves level is 1.2 times the short-term external debt.

We hold the view that not all short-term external debt pose an immediate claim on reserves given the external assets and export earnings of debt holders. It is also noted that more than two-thirds of the short-term external debt is accounted for by the banking sector, largely in the form of interbank borrowing and non-resident deposits. The debt liabilities are partly covered by the banks’ corresponding external assets.

The Malaysian banking sector remains resilient due to sound capital ratios, solid liquidity and low credit risks. The commercial banking sector is well-positioned to weather various challenges given the system's strong regulatory framework.

Kuala Lumpur, Monday, 16 November 2015:- The Association of Banks in Malaysia (ABM) wishes to clarify a recent report on banks being ‘overly cautious’ on mortgage loans for first time home buyers.

“The business of our member banks is in the main lending or extending credit. There is no intention whatsoever to make lending more difficult, particularly for first time home buyers,” ABM says. First time home buyers who are eligible will continue to be able to obtain financing. What is important is for such buyers to recognize the need to make sound decisions of their own affordability appropriate to their financial circumstances.

For first time home buyers, the bank usually finances up to 90% of the price of the property. They may also want to consider applying for Government schemes such as “Skim Rumah Pertamaku” for assistance in their property purchase.

Special housing loan packages are being offered by commercial banks to suit the needs of first time home buyers. They are thus encouraged to shop around to find a financing package which best suits their needs. Additionally, applications for such mortgage loans are decided on a case to case basis and there is no blanket approval system.

Consumers are also encouraged to fully and accurately disclose all material information with regard to their financial position when applying for a home loan. In conducting affordability assessments, commercial banks take into account the applicant’s income after statutory deductions, expenditure on necessities and all existing debt obligations from banks and non-bank lenders. For self-employed applicants, banks will also take into account their proof of savings and regular income sources. First time home buyers should work with their financiers when making the suitability and affordability assessments for any facility applied for to pave the way for more robust financial management on the part of the buyers. Commercial banks are committed to playing their role in this process.

ABM and its Council banks would be pleased to engage with all State Governments with regard to matters related to home ownership in the state. Members of the public who may have enquiries or complaints related to housing loan matters are welcomed to contact us at our ABMConnect hotline by dialing 1-300-88-9980, or emailing us at eABMConnect by logging on to our website, www.abm.org.my.