AmBank to remain vigilant

“The group will continue to increase its provision buffer should the need arise, ” AmBank (M) Bhd CEO Datuk Sulaiman Mohd Tahir told StarBiz

PETALING JAYA: The recent resurgence in the number of Covid-19 cases underscores the highly volatile circumstances that are exacerbating the damage already inflicted on the economy, while posing challenges to a swift economic recovery.

AmBank (M) Bhd CEO Datuk Sulaiman Mohd Tahir said this, adding that as a result, the bank, ranked sixth by asset size, had set aside an additional RM205mil to “strengthen provision coverage” in the second quarter of its financial year ending March 31 (FY21).

It also reported a net profit of RM237mil, down 35% on a year-on-year basis over the same period.

He didn’t say if the lender had set aside more provisions for doubtful debts in the October-to-December 2020 period.

Notably, this was the period when the blanket moratorium had ended and it remains to be seen what the impact of this has been so far, when the group reports its financial results for this period, later in February.

A blanket moratorium – a halt on loan payments – was introduced by the government back in April last year for a period of six months, as a result of the Covid-19 pandemic, which caused many to lose their source of income, and therefore, be unable to make good on their loan payments.

Banks, which make most of their money from lending funds to businesses and individuals, have had to take a hit as a result of this.

Moving forward, Sulaiman told StarBiz in an interview that the lender’s non-performing loan or NPL ratio is naturally expected to rise as repayments restart post-moratorium, even as the pandemic continues to affect the income of many businesses and individuals.

He said the group was closely monitoring the impact of the economic slowdown on credit portfolios through stress tests, identifying vulnerable borrowers and conducting regular portfolio reviews as part of its ongoing credit vigilance.

“The group will continue to increase its provision buffer should the need arise, ” he said.

The bank’s NPL stood at 1.57% as at September 2020.

Analysts have predicted that Malaysian banks’ NPL ratio will increase to 4% in 2022 from just half of that in 2019, as the various assistance programmes for those in need start to decelerate.

At the moment, banks have said that they will still help those who really cannot pay back their loans as a result of the Covid-19 pandemic.

In this aspect, Sulaiman said AmBank had actively reached out to more than 500,000 customers to offer repayment assistance.

“In fact, as at mid-October 2020, we have processed more than 60,000 applications from individuals and small-medium enterprises (SME) customers and have approved close to 100% of these applications, ” he said.

Sulaiman said the bank was looking to launch a fully-digital SME business current account opening with electronic Know-Your-Customer (eKYC).

With this, SME customers will not be required to walk into a branch to open a current account and will be able to do so completely online, according to him.

Notably, it is not the first to do this, as most of its competitors have already launched such a service.

Growing the SMEs business

Meanwhile, AmBank Group managing director of business banking Christopher Yap said with the lender’s strategy, which it has named the Focus 8 Strategy, under the SME segment, the group is looking at the underserved categories in terms of up-and-coming small businesses.

“There are still opportunities out there, what is required is the ability to understand the local market well, ” according to Yap.

“When we started to focus on SMEs, it was a lesser-known segment, straddled somewhere between corporates and small businesses.

“After we started pushing SMEs, there was then more talk about SMEs, particularly in the last four years, which is good for us, and more importantly, good for the SMEs as they are now getting a lot more attention, ” he added.

“If we focus on SMEs locally, we will improve our positioning and evaluation, and we will continue to grow.”

Yap said the lender’s intention with its SMEs was to reduce failure rates by “providing assistance beyond financing”.

“Understanding the needs of SMEs, apart from loans, deposits and lending programmes, what we aim to do is create a platform to help these business owners and SMEs, ” he said

Yap said the bank is able to guide them in driving behavioural changes, upscaling as well as paying attention to the areas that they often miss, be it digitalisation, efficiency improvement or foreign labour dependence, among others.

“Given the prevalence and necessity for businesses to have a digital presence, we created AmBank BizHUB, which pertains to the digitalisation of e-commerce, ” he added.

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