AmBank to disburse RM20b in SME financing by 2021

KUALA LUMPUR: AmBank (M) Bhd aims to disburse RM20 billion in loans in the next three years to spur SME development in Malaysia.

In 2018, the bank disbursed RM6.14 billion worth of SME loans to 2,200 customers, marking a 30.6% growth from RM4.7 billion in 2017.

AmBank group CEO Datuk Sulaiman Mohd Tahir said growth came from the small businesses and it is expecting a double-digit SME loan growth over the next three years.

“We expect SME business banking to see a loan growth of 20-25%, a marked difference from the industry loan growth of 4-5%,” Sulaiman told a press conference today.

In line with its Top Four strategy, AmBank has undertaken several initiatives aimed at igniting SME growth.

“AmBank Group will continue to support SMEs through much needed financing. At the same time, we are also conscious of the need to go beyond providing companies with funding. Through our various SME-centric initiatives, we are focused on being there for our SME clientele, from cradle to IPOs,” Sulaiman said.

He said the bank is working on automating the loan application process and hopes to approve loans within 24 hours by May and to disburse loan in a week. It has invested RM23 million in this system.

To enhance the support rendered to its SME clientele, the bank also looks to launch a purpose-built SME business banking service centre with a dedicated team to assist SMEs in their daily needs. The service centre is expected to be launched in the third quarter of 2019.

Sulaiman said banks play a big role in availing funding to SMEs and as it continues to develop successful SMEs, the more opportunities it has to work with them.

“Malaysian banks are either good at corporate or retail (segments) and not so good in the middle. We think we’re good in the middle (SMEs),” said Sulaiman.

The bank’s AmBank BizCLUB, a platform to help SMEs scale to the next level through financing and beyond financing initiatives, offers training, networking and publicity opportunities to SMEs.

AmBank Group managing director of business banking Christopher Yap said central bank statistics revealed that there are RM10 billion worth of non-performing loans (NPLs) by some 5,000-6,000 businesses with access to financing. He attributed the problem of NPLs to the majority of businesses that do not have adequate strength in their management which cost companies to fail.

“We give you financing but we also want to build a platform to help businesses to be successful by imparting business knowledge,” Yap said.

The second season of the AmBank BizRACE, the cornerstone initiative under the AmBank BizCLUB provides SMEs with the opportunity to win RM2 million worth of prizes. This year’s competition has seen more than 1,000 entries from SMEs across the nation.

On another note, Sulaiman said a 25bps cut in the overnight policy rate (OPR) is estimated to result in a reduction in the group’s margin of about RM50 million, given that it rakes in up to RM1.5 billion in annual profit.

“If it (rate cut) can be offset against new loan growth, hopefully the profitability is there. Only the margin will be compressed,” he told reporters.

Sulaiman said the possible OPR cut will affect banks and there will be less opportunities for banks to make money in the segments of current account and savings account.

“The reduction of OPR is not good for banks but good for customers. The reduction of OPR is to drive business expansion and to encourage investments. Hopefully the volume (from increased spending) can compensate for the reduction in OPR.”

Economists have flagged the possibility of a 25bps cut in the OPR from the current 3.25% to 3% in 2019, following a more-dovish-than-expected shift in the US Federal Reserve’s monetary policy guidance recently.