According to the research house, while the normalisation in the monetary policy will be moderately positive for banks, the three smaller institutions will see the biggest net interest margin expansion and earnings boost.
"For the large banks, NIMs expansion of 2-4bps would translate into earnings uplift of 1-2%," it said.It said deposit rates, namely for fixed deposits, should also rise by the same quantum, although the full transmission to higher funding costs will only be evident after deposits are fully re-priced in three to four months.
In the event of a third 25bps rate hike in September, the cumulative earnings uplift would improve to 2.2%.
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