Citing the Association of Banks in Malaysia,
CIMB said in a report that any added costs incurred post-GST would be
“mostly pass-through” and have a minimal impact on banks’ earnings.
“The direct negative impact of the implementation of the GST is the RM10mil to RM20mil additional cost of managing it.
“We also gathered that the banks are working
with the regulators on the arrangements to claim from the Government
the additional 6% GST they had paid to their vendors,” the research
house said.
CIMB expects the imposition of the GST to
dent consumer/business sentiment in 2015, at least within six months
after the implementation, namely, between the second and third quarters
of 2015.
“This does not bode well for banks’ loan and
fee income growth. There have already been signs of weakening loan
growth, which eased from 9.3% year-on-year in December 2014 to 8.6% in
January 2015.
“We advise investors to continue trimming
their holdings in the banking sector, given the concerns of weaker loan
growth, margin contraction and higher credit costs,” said CIMB.
According to CIMB, among the items that would be “pass-through” costs are essentially fees and charges recovered from customers.
“This means that the bank is merely paying
for services on behalf of the customer. The underlying transaction
remains taxable (where applicable), but the tax invoice will be issued
to the customer by the service provider directly (if the tax invoice had
not been issued earlier to the bank).
“The bank will not charge an additional GST
but will deduct the GST amount from the customer’s account to pay the
service provider.”