Impact of rising funding costs is greater on Islamic banks, says Moody’s

As bank deposit rates move up to reflect rises in the overnight policy rate (OPR), Islamic lenders will feel the impact of tighter funding costs more so than their conventional counterparts, according to Moody’s Investors Service.

Moody’s expects deposit rates to continue to go up this year because of competition for deposits among banks and a shift among depositors to higher-yield term deposits, amid “elevated” interest rates.

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