COMMERCE Asset-Holding Bhd (CAHB) sees the possibility of a slower loans growth as the Iraq war and the Severe Acute Respiratory Syndrome (SARS) outbreak have put a brake on the gross domestic product (GDP) growth of the country.
Assessing the country's economic performance in the first quarter, CAHB group director Dr Rozali Mohamed Ali said there might be a “slight downward revision” on the GDP for the year. Consequently, the group's forecast for loan growth, which is based on the rule of thumb of 1.5 times of the annual GDP growth, was likely to be lower than earlier forecast.
“The loan growth may be lower now. It depends on the economic situation,'' Dr Rozali said, adding that the growth would be a broad-based one.
In its latest annual report, CAHB had forecast loan growth at between 6% and 7% for its commercial banking arm Bumiputra-Commerce Bank Bhd (BCB) in the current year ending Dec 31 on the assumption that GDP will grow at 4% to 5%.
In the year ended Dec 31, 2002, BCB achieved a loan growth of 5.3%, with the housing and manufacturing sectors accounting for 16.7% and 18.5% of its loan portfolio respectively.
The commercial banking division contributed a large portion of group profit before tax, accounting for 45.3% of profit before tax, and merchant banking 13.1%.
Despite the likelihood of slower lending activity, the group remains positive on its prospects.
“The economy is showing resilience.
“We think that the prospects for the rest of the year are quite good,'' Dr Rozali said after the group AGM in Kuala Lumpur yesterday.
He said given the prevailing challenging economic conditions, the group was trying as hard as possible to mitigate the adverse impact.
According to Dr Rozali, the non-performing loans (NPLs) ratio might fluctuate as certain industries were severely hit by the SARS outbreak, which was a “temporary phenomenon”.
“We should be able to contain the NPLs this year. We have the capacity to recover during the rest of the year,'' he said.
The group's net NPL ratio dropped to 6.1% in last financial year ended Dec 31, from 6.7% in 2001, while BCB's net NPLs rose slightly to 7.2% last year from 7.1% previously.
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