Affin Daily Insight (LV) - 20 March 2014 - BANKING / AUTO / TOPG / TROP / ECONOMY - BNM ANNUAL REPORT 2013 / DMR

Top Calls

Sector Update � Banking (OVERWEIGHT, maintain) - New Base Rate to be implemeted effective 2 Jan 2015 The Base Rate (BR) will replace the current Base Lending Rate (BLR) framework (w.e.f. 2 Jan 2015) as the main reference rate for new retail floating rate loans. Determinants of the BR include, the bank�s COF, the SRR (at 4%), credit risk, liquidity risk premium, operating costs and profit margin. Under the cost-plus structure, spreads will remain positive as it would not be possible for financial institutions to offer lending rates below the reference rate. Meanwhile, loans based on the existing BLR will also be correspondingly adjusted should there be any future revisions on the BR. In our view, the BR will ensure that the banking players will not misappropriate the pricing of risks. Depending on the level of a potential pullback in mortgages growth the implementation will stem the decline in industry NIMs compression. We expect the move to be positive on banks� 2015 earnings. Maintain OVERWEIGHT rating.

Other Calls

Sector Update � Auto & autoparts (UNDERWEIGHT, maintain) - Expect rising cost of living to crimp purchases

Company Update � Top Glove (ADD, maintain) - 2Q FY14 preview: A slight blip

Company Update � Tropicana (BUY, maintain) - Selling 309 acres of Canal City land to Eco World

Economy � BNM Annual Report 2013 - Exports and private sector to lead economic growth

Debt Market Research - Sustained buying, BNM to continue accommodative monetary policy & FOMC slightly hawkish

Morning News & Market Summary

For important disclosures, please refer to the Disclosure section at the end of the individual linked research reports.

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