Commercial Banks: Rate Cut Ripples: Gauging the Potential Hit to Bank Earnings - By HMFS Research

<p></p><ul><li><span style="font-family:Arial, Helvetica, sans-serif;font-size:medium;">A 100bps policy rate cut is estimated to have a materially negative impact on banks' earnings, particularly for those with a higher proportion of interest-earning assets and lower CASA ratios. Our estimates suggest that the decline in EPS could range from 1% to 27%, depending on each bank&rsquo;s asset mix and deposit profile. Stateowned and mid-tier banks such as NBP, JSBL, and BOP are most exposed, with expected EPS hits of 23&ndash;27%, driven by their large balance sheets and lower CASA insulation. On the other hand, MCB, MEBL, SCBPL, and ABL appear least sensitive, reflecting strong CASA franchises (90%+) and/ or more diversified revenue streams.</span></li></ul><ul><li><span style="font-family:Arial, Helvetica, sans-serif;font-size:medium;">O...