The Star Online: Business
The Star Online: Business |
| Posted: 22 May 2011 06:17 PM PDT PETALING JAYA: The higher increase in the base lending rate (BLR, to which lending rates are pegged) compared with that of the benchmark overnight policy rate (OPR) has raised more than eyebrows among consumers. "This is totally unacceptable,'' a reader wrote in an email to StarBiz. "Banks will be making higher margins at our expense. "If you look back since Bank Negara cut the OPR to 2% and then increased it back to 3%, the BLR has increased at a faster pace. Back in 2008 when the OPR was 3.25%, the BLR was 6.5% but now the OPR is at 3% and the BLR is at 6.6%. "Bank margins have expanded by 35 basis points (one basis point is one hundredth of 1%). With RM900bil in total loans, this expands banks' profits by RM3.2bil at the expense of consumers. "Also, when the SRR (statutory reserve requirement interest free deposits banks must keep with Bank Negara) was reduced from 4% to 1% of deposits, the savings were not passed on. But now that the SRR has been raised back to 3%, banks expanded BLR by five bps. Effective May 11, the BLR went up 30bps (to 6.6%) which is higher than the OPR increase of 25 bps. This speedier repricing of loans relative to fixed deposits may be mildly positive on bank margins in the near term but have already got some consumers up in arms. "By our estimates, the additional 5bps increase in the BLR sufficiently compensates for the recent 100 bps increase in SRR to 3%,'' said Maybank IB, adding that this was probably an ad-hoc adjustment rather than to specifically compensate for the SRR hike. RHB Bank principal officer Renzo Viegas said each banking institution could introduce its own BLR based on its cost structure and business strategies. Under Bank Negara's new interest rate framework issued in 2004, this was allowed to provide more efficient pricing of financial products. But for most banks, the OPR is a key variable in deriving the BLR. "Assuming that cost structure and business strategies remain intact, it is therefore not surprising that with every OPR hike or contraction, the BLR will adjust in tandem with the change in OPR,'' said Renzo. There are mixed views on regulatory intervention to prevent the rise of BLR following an increase in OPR. "It is best that market forces determine the trajectory of interest rates,'' said Malaysian Rating Corp Bhd (MARC) vice-president and head of financial institution ratings Anandakumar Jegarasasingam. Banks are likely to experience a narrowing of net interest margins with the recent OPR hike which is concurrent with the upward movement in the SRR coupled with intense competition, said RAM Ratings head of financial institution ratings Promod Dass. "However, banks with a large proportion of their funding base composed of low cost deposits (current and savings accounts or CASA) and a predominantly floating rate loan book will be able to better mitigate this trend,'' Promod said. Renzo sees that for banks with a high fixed rate loan book, this may have a negative effect on margins. For banks with high floating rate books and strong CASA to fixed deposit ratio, the OPR hike will likely improve the overall net interest margin, said Renzo. According to Maybank IB Research, the prime beneficiaries would be Maybank and CIMB which have a lower proportion of fixed rate loans and higher CASA base. Hwang DBS Research, in its update on Asean banks, had identified Maybank, Hong Leong and Alliance as having a higher proportion of variable rate loans and CASA. However, higher rates may affect the repayment ability of some borrowers. "Any potential default as a result of this is likely to be manageable at this stage,'' Anandakumar said. Analysts estimate about 55% of the total loan portfolio of banks comprises consumer loans, which include 24% to 25% in mortgages. Besides the BLR, another indicator is the average lending rate which can vary especially in the cut-throat mortgage market. "Five years ago, mortgage lending was BLR plus 1% or 0.6%. Since then, it is BLR minus 2.4%,'' said an analyst. "We have to look at the effective lending rate.'' "Pricing strategies deployed by banks would generally result in narrower margins,'' said Anandakumar. However, that could result in expanded market share. To compensate for the lower margins, banks have other strategies such as packaging lending products with lock-in periods and insurance products. They have also made their deposit structures more attractive to ensure a supply of low-cost funding, he added. "When all banks gravitate towards homogenous pricing across the industry to capture market share, the margins will definitely compress,'' said Renzo. Those with strong credit risk controls and low expense base will continue to remain profitable; however, balance sheet growth does not necessarily lead to sustainable profitability growth, he cautioned. Full Feed Generated by Get Full RSS, sponsored by USA Best Price. |
| See the world with your heart, instead of your eyes Posted: 22 May 2011 06:01 PM PDT IT'S Monday and you have just reached the 32-storey building where your office is located. And the lifts are not working. Your office is on the 28th floor, so walking up is out of the question. You have a choice get all flustered up, or hop over to the nearby caf for a cup of coffee until the lifts are working again. Life is invariably about choices. But for some of us, the option is not always there. Certainly, we do not choose to have cancer, to be born with a disability, or to lose a job because the company went bust. Today is Monday, so let me share a story to lift up your spirits and drive away your Monday blues. Albert Wong is a young adult with an immense passion for life. Readers of The Star know Albert. In 1999, they rallied to his cause and raised more than RM500,000 for him to undergo treatment in Tennessee. I have known him since he was a primary school boy. Born with Duchenne Muscular Dsytrophy, his muscles progressively become weaker as he grows older. At first, he was able to move around with crutches, but eventually the wheelchair became a permanent fixture. And so we built ramps around the school, and ensured that his class always remained on the ground floor. Each year, Albert would emerge top of the class, and come the prize-presentation day, the VIP would always have to come down from the stage to give him his awards. And he always got the loudest applause. Albert aced all the public examinations UPSR, PMR and SPM. In fact, he was the top disabled SPM student in 2006. His application for a Public Service Department (PSD) scholarship was originally rejected because the officer thought that it would not be possible for a student in a wheelchair to go overseas to study if the scholarship was granted. I recall how this officer, after the issue was sorted out, came to Albert's house to personally hand him the letter and was given an instant education on the student's ability, not his disability. He was very touched and promised that in future, he would ensure that such applicants are not prejudged. And so Albert went to law school, at a private college, nearby his house. By then, Albert had grown physically and his transport needs had to be customised. Not only was his wheelchair fully motorised, his parents had to invest in a van equipped with a chair lift. Getting him in and out of the van was an adventure in itself, which is why I find it hard to lose my patience when I am caught in a big jam. I only have to think of Albert. There is much to share about amazing Albert, and his equally incredible parents and sister, who are his key caregivers. This year, Albert took another major step in his life journey. He is doing his masters at Universiti Malaya. Although his application was initially rejected, he persevered. He appealed and he got his place. And the bonus is that he got to study under Azmi Sharom, a cool lecturer who writes the column, A Brave New World, in this newspaper. Albert is pleased that UM is disabled-friendly. More importantly, he is treated just like any other graduate student. "Azmi gives his students a lot of leeway. He seems to trust that his students know what they're doing. He also believes that his students are mature enough to complete their tasks," says Albert. And that's the way it should be. Whenever I am with Albert, I see his abilities. One could talk to him for hours. He has an amazing grasp of current issues that is far superior to many people of his age who seem only to be interested in entertainment and making big bucks. Albert wants to change the world. I believe every law firm in this country, and also the Attorney-General's Chambers, should contact him and offer him a job upon graduation. Are you still sore over some minor work issues from last week? Are you angry that your boss has misread your intention? You have a choice to forgive and move on or to let things fester. In The Little Prince, there is a quote, "It is only with the heart that one can see rightly, what is essential is invisible to the eye." And so today is Monday. Why not start off your week by seeing the world with your heart, instead of your eyes? Your colleagues and the people you meet will look very different. You will be inspired. |
| Posted: 22 May 2011 05:58 PM PDT By JEEVA ARULAMPALAM jeeva@thestar .com.my KUALA LUMPUR: Datuk Dr Paul ChanTuck Hoong never envisioned that his small shoplot education business would grow to be a multi-millionringgit venture with an international appeal. The co-founder and president of HELP University College decided on education after experimenting with limited success on a number of other businesses. But education was what he knew and what he was most passionate about, and that was where he made his mark. He decided to set up an education business given his sheer love for teaching and wanting to impart knowledge, despite not knowing how to go about running an education outfit. All he knew was that he wanted to make tertiary education readily available to Malaysians. Chan and his wife, Datin Low Kam Yoke, started HELP in 1986 with a capital of RM25,000. He was 43 then. The higher learning centre first started business in a small shoplot with only two classrooms and some 30 students in Kampung Attap, Kuala Lumpur, offering the BSc Economics external programme from the University of London. Since then, HELP has grown into a large-scale education business operating locally and overseas with close to 14,000 students. It was listed as part of a larger group, HELP International Corp Bhd, in 2007 and has a paid-up capital of RM71mil as at the end of the financial year on Oct 31, 2010, with a turnover of RM105.2mil and net income of RM19.1mil for the year. While Chan, his wife and two grown kids Juliet and Adam still own some 8.62% of the company, the major shareholder of HELP International now is property developer Selangor Properties Bhd with a 51% stake. Selangor Properties first bought into the company in 1992 with a capital injection of RM3mil and its entry as a shareholder paved the way for HELP to re-locate to its current premises in Pusat Bandar Damansara. Chan, who left his teaching career in Universiti Malaya to start the education business, admitted to knowing nothing about running such a business initially. "But our minds were open like a parachute, which was our greatest asset," he said in an interview with StarBiz. An economist by training, Chan said his upbringing had limited his ability to dream big and he had to unlearn many things he had grown to know. "When we first started, there were no examples of how big a private university college could be. We only had public universities at that time. I didn't have the vocabulary to think about conquering the world but the digital age has enabled us to think big," he said. The 68-year old said setting up an education business was his calling, after having dabbled in several other businesses such as manufacturing and construction. The passion for learning and reading combined with the thirst for acquiring knowledge, was the perfect formula in establishing an education business. "I believe it takes at least 10 years to hone your skills. Whatever you do, it has to come from conviction and you need to enjoy what you are doing. We decided on education as we wanted to create access as well as the opportunity for Malaysians to enter tertiary education (back in the 80s)," said Chan. HELP was able to carve out its niche by offering external and twinning programmes, which worked out to be a lower-cost option for individuals seeking overseas accredited university degrees. Since then, it has continued to offer attractive twining courses and as HELP offered a wider range of programmes drawing in more students, HELP attained the "university college status" by the Government in 2004. But Chan is quick to add that success does not come without its fair share of failures or pitfalls. "When I was about to leave my teaching career, I was involved in several types of businesses. And I never took the trouble to really learn the businesses and thought I would succeed. "Even though I made a little money, I never continued so I never became an expert. I was involved in construction and made a little money but I never continued. Then, I was involved in doing oil filters and lost money but I never continued. I was involved in making rubber gloves and did not succeed but I never continued. "So I was more a watering can than a laser beam. But that cannot be because to succeed, you need to be driven and focused," he said. Chan had a difficult upbringing having to tough it out in the slums of Pudu, Kuala Lumpur, and being born into a large family. Until he was 10 years of age, he lived with his aunt while his father supported a family of nine on his wages as a petition writer. The greatest lesson Chan has learnt is having self-awareness and knowing one's limitations. "Self-awareness and self-questioning keeps us on alert. Many of us don't have self-awareness and that is why we can't break certain habits. After all, one's character is an accumulation of habits the way we think, act and conduct ourselves. It gives us the composite of our personality and if we develop a certain thinking or decision-making process or associate with a certain group, that is who we are," said Chan. He added that self-awareness is pivotal in what one does, what decisions are made and whom one associates with. While the day will come when Chan needs to relinquish his position within the education company, he said he would never retire from education. "There will always be other avenues for me to continue contributing (to the group). One aspect we are trying to build now is the (right and sustainable) culture within an organisation. It provides the climate for each individual to grow and define themselves," he added. It's evident that Chan's love for education has helped him build a successful and profitable business, which should continue to flourish with the right culture in place. Full Feed Generated by Get Full RSS, sponsored by USA Best Price. |
| You are subscribed to email updates from The Star Online: Business To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
| Google Inc., 20 West Kinzie, Chicago IL USA 60610 | |
0 ulasan:
Catat Ulasan