WHILE looking forward to a better operating environment, banks are prepared for the pace of recovery to be uncertain and uneven.
Amid the new normal, they will remain vigilant and agile in balancing growth with risks.
Many customers have been significantly hurt by the pandemic and will remain in need of financing support from banks.
But business confidence is slowly returning, and there are opportunities for growing and lending again, possibly more so in the second half of 2021.
While Moody’s has upgraded Malaysia’s banking sector from “negative” to “stable” on a better operating environment, banks are not expecting strong growth in the immediate term.
“But we can certainly expect lower provisions in 2021 and better profits too, ’’ said OCBC Bank (M) CEO Datuk Ong Eng Bin.(pic below)
While sharing the optimism expressed by Moody’s, the Public Bank Group remains “cautious and guarded against all possible eventualities, given the evolving nature of the Covid-19 problem, ’’ said CEO Tan Sri Tay Ah Lek. (pic below)
The pandemic has hastened the digital innovation and enhancements at the Public Bank Group which is exploring ways to enhance its capability in data analytics and artificial intelligence.
“We are cognisant of changing consumer preferences and likely disruptions to be caused by digital banks, not only here in Malaysia but regionally.
“Digitalisation initiatives will remain one of our key priorities, moving forward, ’’ said Tay (pc below) while noting the risks involved.
Risks include short life cycles of applications arising from the rapid advancement of technology, cybersecurity threats and customers’ readiness to adopt digitally-driven services.
As the Public Bank Group focuses on its organic growth strategy in retail and commercial banking, it will continue to strengthen its resilient business model and cost competencies, including its superior asset quality, efficient cost management and customer service excellence.Tapping on its large customer base, it will intensify cross-selling to provide a wider stream of products and services that suit customers’ needs.
Challenging economic conditions continue to pose asset quality risks to the group which has set aside pre-emptive provisions in anticipation of further impact from the pandemic.
It has been actively engaging both individual and corporate customers who encounter cashflow constraints via flexible repayment packages under its targeted repayment assistance programmes.
CIMB Group will focus on key segments that offer strong opportunities for profitable growth such as wealth management, treasury and markets, transaction banking and Asean network business within wholesale banking.
Cost optimisation and focused investments will be priorities in driving efficient growth.
CIMB Group will also maintain its strong risk culture and monitor asset quality stringently, while continuing to assist its customers who may require financial assistance.
Although recovery is expected to be uneven across sectors, RHB Banking Group sees lending opportunities in the consumer, manufacturing and commodity sectors which would likely recover at a faster pace.
Malaysian manufacturers should benefit from a pick-up in global supply chain activities as global economies recover.
Private consumption is expected to rebound on the easing of movement restrictions, various government cash transfers as well as tax incentives and relief for property and motor vehicle purchases.
“We also see growth opportunities in the capital market as the initial public offering, equity and debt capital market pipelines are looking strong, ’’ said RHB group managing director Datuk Khairussaleh Ramli.(pic below)
Improved investor sentiment and risk appetite will encourage the execution of the mandates, while resulting from the low interest rate environment, there has been stronger demand for wealth management products.
Alliance Bank Malaysia has outlined three key priorities to scale up on its small and medium enterprises (SME) and consumer segments, deepen customer engagement and improve efficiency.
“We will commercialise our product innovations, expand our sales teams and digital channels, while forging more strategic partnerships, ’’ said Alliance Bank Malaysia.
Alliance Islamic Bank Malaysia will play a key role here especially based on new value propositions and the environmental, social and governance or ESG agenda.
To deepen customer engagement, Alliance Bank Malaysia will focus on serving both the needs of businesses and the personal needs of business owners as well as those of their stakeholders; these include their families, employees, customers and business partners.
The various customer support channels will be enhanced at Alliance Bank Malaysia to improve speed and simplicity; the principles of the Alliance Way, which is its differentiated customer engagement approach, will be embedded into its customer journeys.
Operations at Alliance Bank Malaysia will be transformed and streamlined for greater productivity, while focusing on its key portfolios and simplifying its processes as much as possible.
The road ahead may not be smooth, as long as the pandemic lingers.
While banks see to their customers who are still in pain, they will look for avenues of growth not just in traditional areas but new catalysts in digitalisation, data analytics and artificial intelligence.
Yap Leng Kuen is a former StarBiz editor. The views expressed here are the writer’s own.