Bank Muamalat expects 5-6% loan growth

KUALA LUMPUR: Bank Muamalat Malaysia Bhd expects its loan growth for the current financial year ending March 31, 2017 to be at 5% to 6%, CEO Datuk Mohd Redza Shah Abdul Wahid said.
He said the forecast was about 2% below its initial target on the back of the current slow economic condition which caused the bank to focus on fee income and digital space.
Speaking to reporters after a memorandum of agreement signing ceremony between the bank and DRB-Hicom University to jointly develop an Executive Leadership Programme, he said personal and corporate financing continues to contribute significantly to its loan growth.
In addition, fee income contribution from Ar-Rahnu and wealth management business to the bank were increasing.
On capital expenditure for the next financial year, he said the bank might allocate up to RM200 million to improve its efficiencies and enhance digital banking.
Meanwhile, Mohd Redza said the prevailing market condition is very challenging due to significant changes in technology and new regulation such as the implementation of liquidity requirement under Basel III next year.
“We are now in the midst of preparing a business plan and looking at building the organisation with the current resources that we have,” he said.
He pointed out that the bank was not looking to reduce its staff but would open a few more branches and reallocate resources to the growth areas.
On Islamic banking outlook next year, Mohd Redza said the industry loan growth would not be more than 5%.
“We see businesses have slowed down and demand for loans have declined.
Hence, there will be a slowdown in the overall business environment.
“Fortunately, banks are well structured in capitalising their positions, so we don’t see a significant impact,” he said.
On the potential listing of Bank Muamalat, Mohd Redza said the bank was still reviewing the matter due to the slow market condition and had not decided on the timeline yet.
He said it would be up to the shareholders to decide on any merger and acquisition exercises in the future to increase the bank’s value. – Bernama