SEREMBAN: Banks should continue to support viable businesses and households affected by the Covid-19 pandemic as the six-month automatic moratorium imposed last year did not result in losses as forecasted earlier, says Datuk Seri Mohamad Hasan.
The Umno deputy president said recent reports on profits posted by several major banks showed they had the resilience to continue assisting those affected by the pandemic.
"It is certainly in the collective best interest of the banking industry to continue to support viable businesses and households throughout this challenging period.
"The Finance Ministry and the Central Bank should also take proactive policy action to address this issue.
"For instance, tailored payment assistance and relief measures targeted at vulnerable households and businesses should be expanded and extended, considering the current impact of the third wave of the pandemic," he said on Monday (March 1).
Mohamad said the Covid-19 pandemic has left lasting socioeconomic scars in Malaysia with many households and businesses suffering and struggling to stay afloat.
He said this was based on the amount of non-performing loans (NPLs) which reached a nine-year high of RM28.7bil at the end of 2020.
"In fact, an upward trend in total impaired loans is observed among households, wholesale and retail trade, restaurants and hotels after the blanket loan moratorium ended.
"For households, the loss of income and unemployment impaired the ability to service loan commitments especially for those highly-indebted individuals, contributing to a rise in impaired loans," he said.
The default of loan repayment among business borrowers, he said, was due to loss in revenue and business closures, particularly in the tourism-related, retail and recreational sectors.
Citing Bank Negara’s "Financial Stability Review – First Half 2020" report, Mohamad said overall impairments could rise to above 4% of loans by the end of 2021, mainly driven by the business segment.
"This is worrying as the impact of rising NPL rates could extend beyond the financial sector and hinder Malaysia’s economic recovery efforts.
"All in all, I sincerely hope that we will do the very best we can to alleviate the suffering of those struggling financially," he added.