One-month SORA is about 1.6% currently, and HSBC strategists see it falling to 1% by the end of the year, with the view that lower rates are necessary to offset the tightening impact of currency strength.
Analysts expect net interest margins (NIM) to ease against a declining Sora backdrop. This year, Sora and Hibor have deviated significantly from the Federal Funds Rate (FFR), analysts note.
After some research on NIM estimates, the HSBC analysts say their NIM forecasts are 2 bps below the consensus average for 2025-2027. Since net interest income accounts for more than half of the local banks’ total income, earnings are likely to be affected in 2Q/1H2025.
