Credit Guarantee Corp expects non-performing loans to decrease


  • Banking
  • Wednesday, 12 Nov 2014

Wan Azhar (right) shaking hands with Affin Bank managing director and CEO Datuk zulkiflee Abbas Abdul Hamid. With them is CGC chairman Datuk Agil Natt.

PETALING JAYA: Credit Guarantee Corp Malaysia Bhd (CGC) is expecting its non-performing loans (NPL) to decrease to below 3% in 2015.

“This year, we’re looking at an estimated 2.9%, so 2015 is looking to be a good year,” president and chief executive officer Datuk Wan Azhar Wan Ahmad told the press at a signing ceremony between the institutional guarantee provider and Affin Bank Bhd to collaborate on offering portfolio guarantee (PG) financing worth RM50mil.

Between 2011 and 2013, CGC’s NPL stood at 4.3%, 3.5% and 3.1%, respectively.

“Three per cent is a fair figure because too low an NPL percentage indicates that the lending criteria is too tight and small-medium enterprises (SMEs) can’t borrow,” he said.

The collaboration between both financial institutions is CGC’s first PG with a distinctive risk-sharing mechanism. Under the agreement, Affin will absorb any eventual impaired loans in the first year of financing.

Wan Azhar said CGC had hit 90% of its target volume of 5,600 accounts this year and he was confident the new partnership would propel them to exceed the total value of RM2.7bil achieved so far.

He added that the institution had achieved its PG loan target of RM900mil and this amount had benefited a total of 1,800 SMEs.

This was the 10th institution CGC had partnered with and its 11th deal so far.

“The PG financing will benefit SMEs who want to fulfil their working capital requirement, asset acquisition and capital expenditure, and it is expected to benefit about 170 SMEs for this first tranche,” Wan Azhar said.

The collaboration contributes 20% to Affin’s gross loan base of RM37bil.

“Moving forward, we will certainly be more aggressive on SME financing,” said Affin executive director Amirudin Abdul Halim.

Key features of the PG are a maximum loan tenure of seven years from the date of CGC’s approval for financing amount between RM100,000 and RM500,000 and certainty of approval.

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