KUALA LUMPUR: In line with the loan growth of last year, Alliance Bank Malaysia Bhd foresees loan growth hovering between 2% and 3% for the financial year ending March 31,2021 (FY21) from 2.2% a year ago.
Alliance Bank group chief executive officer Joel Kornreich (pic) said the bank is more restricted in which loans it underwrites for FY21 due to the Covid-19 pandemic.
However, he expects the bank to roughly produce 50% of the loan volume that was produced in the previous years.
“Last year, we saw almost 8% growth in SME loans and 3% growth in consumer loans.
“This year we expect SME loans growth to moderate while consumer loans will probably be about the same level, bringing that aggregate between 2% and 3%, ” he told reporters after its AGM yesterday.
Kornreich pointed out that the expected loan growth of 2% to 3% will support the bank’s income for FY21.
Although he expects the bank to post “comfortable” profits for FY21, Kornreich noted that Alliance Bank will record lower earnings this year compared to a year ago due to overnight policy rate (OPR) cuts and a forecast increase in credit costs from the Covid-19 pandemic.
“There is still uncertainty in the performance for FY21. It depends on how our customers are going to emerge from the moratorium period. For sure, it will not be the level seen in FY20, ” he said.
Kornreich foresees the net credit cost to be maintained below 100 basis points for FY21, anticipating higher credit cost after the moratorium ends.
On the dividend payout for FY21, he said there is still low visibility on the payout as the economic impact from the Covid-19 pandemic is still not clear.
Besides that, Kornreich estimated 20% of Alliance Bank’s customers have opted out of the moratorium and continued to repay their loans, with the remainder 80% of customers taking advantage of the moratorium.
Despite reaching out to its customers, he said most of its customers are still unsure if they need assistance as the six-month moratorium has not ended.
“However, we are offering special payment relief assistance, and automatic moratorium extension for the B40 segment, customers who are affected in the high-impacted industries from Covid-19 as well as proposing pro-active packages for those who have lower income, ” he added.
The blanket moratorium ends on Sept 30.
Meanwhile, Kornreich believes that 15% of its SME clients would benefit from the bank’s loan modifications, while 20% to 30% of its SME customers have opted out of the moratorium. Moving forward, he said the bank’s priority is to help its customers via financial and non-financial initiatives as well as accelerate digitisation of the group this year.
“We will assist our customers financially through the extension of the moratorium, loan modifications, those working in highly-impacted industries, those who lost their jobs and have had their income impacted by the pandemic.
“We will also assist our customers via non-financial initiatives, such as helping our SME clients to get onto e-commerce platforms and to advertise via social media platforms.
“We have also accelerated our digitisation efforts via the recently launched Alliance BizSmart eTrade, ” he said.
The bank has allocated capital expenditure of RM30mil for its digitisation efforts in FY21.
Alliance Bank will be launching a digital Know-Your-Customer solution, which will allow individuals to open a savings account or obtain a loan without the need to visit a bank branch.
It also has plans to introduce Digital SME Loan, which provides a paperless solution for businesses to apply for financing online.
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