RCE Capital: We’ll focus on quality loans

PETALING JAYA: Non-bank financial institution RCE Capital Bhd, which received shareholders’ approval for a capital repayment of up to RM98.3 million or 7.5 sen per share, could see slower growth for 2016 due to more stringent policies in approving loans.
“In line with Bank Negara’s concerns over high household debt, we ourselves also have to play our part. We definitely have to be more careful and we’re looking at more quality loans,” CEO Loh Kam Chuin told a press conference after the company’s EGM here yesterday.
He said the company has been focusing on loan quality to ensure that non-performing loans (NPLs) are at a manageable level, which he declined to disclose.
“It is actually coming down. I try not to share too much information (on NPLs) because there are competitors around,” he explained.
Loh said it is unfair to compare RCE Capital with the likes of AEON Credit Service, as the company only has a “single product” that provides personal financing to government servants.
Consumer financing is the main component of the company’s loan base, while contribution from commercial financing is insignificant.
For the six months ended Sept 30, 2015, RCE Capital’s net profit surged 57% to RM19.65 million from RM12.52 million in the same period last year, underpinned by higher interest income from the loan financing segment.
While consumer sentiment has weakened due to uncertainties in the economy, Loh stressed that loan applications from government servants have not declined.
“It’s still there and stable, demand for loans is always there,” he stressed.
Moving forward, Loh noted that RCE Capital is looking at mergers and acquisitions (M&As) to bring “value added things” to the company.
“It depends much on opportunities. If the price is right, we don’t mind looking at it, but it has to complement the business we’re doing,” he said, adding that the acquisition target should at least bring in RM20 million to RM30 million to the company.
Loh, however, said the company is not in talks with any parties at the moment.
At the EGM, RCE shareholders gave the green light for the proposed capital repayment by way of a reduction in par value from 10 sen per share to 2.5 sen.
Upon completion, the company will undertake a share consolidation exercise whereby every four shares of 2.5 sen each will be consolidated into one share of 10 sen each.
The corporate exercise forms part of RCE Capital’s capital management strategy which seeks to achieve a more efficient capital structure.
RCE Capital’s share price fell 0.5 sen to 28 yesterday on some 2.03 million units done.