ABM: Banks to continue playing essential role


PETALING JAYA: Commercial banks in Malaysia have played an essential role in the country’s economic growth by providing credit facilities to businesses and households, and they will continue to do so, says the Association of Banks in Malaysia (ABM).

The association clarified and was responding to a recent news report that Malaysian banks were turning cautious on lending.

According to the news wire report dated yesterday, Malaysian banks turning cautious on lending were adding to the country’s woes as economic growth falters.

A sell-off in the ringgit and added volatility in global stocks after Donald Trump’s victory in the United States presidential election give Malaysian banks no incentive to step up appetite for risk, it said.

The report said loan growth would likely weaken to at least a 12-year low in 2016, according to projections by AmInvestment Bank Bhd, RHB Research Institute Sdn Bhd and data compiled by Bloomberg.

“Commercial banks are in the business of lending and viable businesses will continue to be able to obtain financing. Recent data has shown that commercial banks remain supportive of businesses and households by extending loans to eligible applicants,” the association said in a statement yesterday.

“As at end-September, the outstanding business loans of the banking system recorded an annual growth of 2%, with loans being granted to the real estate, agriculture, manufacturing and finance, insurance and business services sectors.

“In particular, both the annual growth in outstanding small and medium-sized enterprises (SME) loans and the level of loans disbursed to SME continue to improve.

“Meanwhile, lending to households continues to grow, albeit at a slower pace with outstanding loans to this segment expanding by 5.6% in September,” ABM said.

It said businesses which face challenges in their loan applications should work with their financiers when making the suitability and affordability assessments for any facility they apply for.

“Banks on their part are committed to enhancing their capability to support businesses and entrepreneurs, which include the offering of various loan packages to meet the needs of innovative enterprises,” it said.

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