SME Bank group MD Datuk Mohd Radzif Mohd Yunus
KUALA LUMPUR: Small Medium Enterprise Development Bank Malaysia Bhd (SME Bank) recorded a 39.5% increase in its pre-tax profit to RM67mil in the financial year ended Dec 31, 2016.
It said on Thursday the increase from the RM48mil in 2015 was due to higher contribution from banking operations and better investment results.
“This performance is supported by continued growth from gross income of the bank’s Islamic banking business which grew at 15% from RM292mil to RM336mil,” it said.
It said the net impaired ratio stood at 8.2% given its developmental role as a development finance institution (DFI), and within a single mandated SME sector.
SME Bank also announced it had strengthened and surpassed its shareholders’ fund as it managed to recoup its accumulated losses with retained earnings of RM109mil versus accumulated losses of RM607mil in 2010.
It also received the approval to convert its RM500mil financing facilities extended by Ministry of Finance (MOF) to equity, which enabled it to strengthen its paid-up capital to RM1.85bil from RM1.35bil in 2016. Its financing portfolio expanded 12% to RM6bil in 2016 from RM5.4bil in 2015.
Group managing director Datuk Mohd Radzif Mohd Yunus said: “The presence of SME Bank as a key player amongst the six DFIs in the country is much stronger today looking at the 38% market share that it has garnered thus far”.
SME Bank, he said, had migrated upward 1,085 clients from its stable of 15,000 companies through its specific intervention activities.
Since the launch of these activities six years ago, SME Bank's unit – the Centre for Entrepreneur Development and Research Sdn Bhd (CEDAR) – had coached and trained more than 34,000 participants in various SME development programmes.
Radzif pointed out that SME Bank had undergone a a significant transformation journey following the launch of its five-year Transformation Plan in 2010.
The thrusts of the plan was to overhaul its business model and processes to move ahead and strengthen its mandated roles as a bank to develop the SMEs.
It restructured and implemented the new operating model wherein it segregated the “need” and “merit” based customers, enabling it to focus beyond its financing approach.
In 2012, it launched “Project Wisdom” to practice Shariah principles in its operations. To date, SME Bank’s Islamic financing asset stood at 92%.
The following year, SME Bank set up CEDAR to offer entrepreneur development and coaching programmes while SMEB Asset Management was set up to manage the bank’s stress asset.
The second stage of the transformation plan was to be self-sustaining and to achieve global standard.
During this phase, the SME Bank became a self-sustaining entity thus becoming less dependent on government funds.
This resulted in the bank being able to pay dividends to the Government since 2012. It was during this time that the bank started being active in domestic and international DFI associations.
Under the current third stage of the transformation plan, the bank is focusing on bridging the financing gap especially amongst the unserved and underserved segment of the SME entrepreneurs.
SME Bank said its main focus is financial inclusivity to reach the target groups directly through a structured and dedicated outreach programme which is the SME Bank XCESS.
In 2016, it held its outreach programmes in 13 locations nationwide and the first national level outreach programme called SME Bank XCESS 2016 attracted about 1,200 participants.
SME Bank has reached more than 3,000 SME entrepreneurs and up to May 2017, the bank has covered seven locations nationwide and 1,500 entrepreneurs. The programme will continue until September this year.
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