KUALA LUMPUR: Affin Bank Bhd says there should be a change as to how banks treat loan moratorium, moving forward, as it seeks to reduce economic losses from the Covid-19 pandemic.
“The government and banks are talking to each other and we would like to see what (would) be the next step. We don’t want to call it a moratorium, as moratorium is expensive for everybody, ” group CEO Wan Razly Abdullah said at a press conference after its AGM.
“(But) it will be something like a moratorium, maybe a new word will come up from it. Hopefully it will not be moratorium, otherwise my shareholders will ask me how much I am losing again. We are looking at some sort of financial assistance programme, ” Wan Razly added.
He said the first moratorium cost the bank RM80mil day-one modification loss and if there is another round of similar moratorium, it would cost the bank another RM80mil.
“But everyone is trying to play their part to assist the Malaysian economy to a recovery. What we are trying to tell our customers is to reach out to us, maybe we can minimise the installment amount. We should work together on how we can manage this so that we can survive and recover from this crisis, ” he said.
Wan Razly said that during the moratorium period, the bank could not charge any interest for hire-purchase or personal financing loans.
“This is the agreement between the banks and Bank Negara as well, that we would have an interest-free period for these customers in this period. But for the other products, such as credit cards and mortgages, these will still be charged an interest. So what we do not charge an interest is basically a cost to the bank of RM80mil: we do not get this back, ” he said.
Wan Razly said this RM80mil would be deducted from its profit and loss statement and that the shareholders would have to bear the cost.
“The Covid-19 situation may require more than six months to recover. But somebody has to pay for this (moratorium) in the end, ” he said.
More than half of the bank’s loan books, or 63% of RM45bil, are under moratorium and its non-performing loans (NPLs) is at 3.11%, he said.
“We will get a better sense of NPLs once the moratorium ends in October. But we are doing our analysis behind the scenes (too), ” he said.
Wan Razly said economic confidence has picked up recently after the movement control order had been relaxed substantially from when it first began in March.
“We see houses being bought, cars being bought. People are spending (again) but we hope this can sustain itself and we want this to snowball to get better and better.
“But the missing piece is the lack of tourism and there is no overseas spend. Some of the hotels and restaurants are at sub-capacity levels, ” he said.
On whether dividends would be impacted eventually, he said the bank would know the impact by the end of the year.
“This would depend on the bank’s performance as it is based on profitability. The first half is not too badly impacted, (but) the second half will see some impact, ” he said.
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