RHB eyes double-digit growth for SME, trade financing biz

According to its CEO, RHB Islamic aims to increase its visibility in the market


RHB Islamic Bank Bhd, a wholly owned subsidiary of RHB Bank Bhd targets high double-digit growth for its small and medium enterprise (SME) and trade financing business within the next two to three years.

MD and CEO Datuk Adissadikin Ali said RHB Islamic aims to increase its visibility in the market, as current contribution in the Islamic SME and trade financing business is relatively small compared to other banking assets.

“At the moment, our Islamic Bumiputera SME banking asset is hovering at 16.5%, while our trade financing business remains below 10%,” he told reporters at the RHB Islamic-Credit Guarantee Corp Malaysia Bhd (CGC) signing ceremony in Kuala Lumpur last week.

“We are actually in talks with Bank Negara Malaysia to develop a more holistic mechanism to boost our target, which is also in support of the government’s agenda.”

Adissadikin added that financial institutions such as RHB Islamic and other stakeholders need to support the central bank’s efforts to concentrate on “Value Based Intermediation” — particularly in the SME businesses.

“Banks are intermediaries when it comes to churning out funds between the surplus economic units, which is our depositors and the borrowers.

“We should enhance these values for people who are lacking access towards credits, particularly the SMEs, as most of them are facing challenges in securing financing to support their business model,” he said.

Meanwhile, RHB Islamic and CGC inked a strategic partnership to become the country’s first bank to provide the Wholesale Guarantee Islamic (WG-i) Bumi scheme, which provides additional avenue for the banks to extend its financing packages to deserving Bumiputera SMEs.

Approximately RM50 million has been allocated as a kick-start for the WG-i Bumi — aimed towards 72 existing Islamic Bumiputera SME cus- tomers — conforming to the predetermined eligibility criteria set by both CGC and RHB Islamic.

As the demand of the business landscape evolves, Adissadikin said RHB Islamic aims to continuously improve and innovate product offerings and services to cater to the clients’ business needs.

“We understand the challenges faced by SMEs in expanding and growing their businesses, as such the partnership with CGC is testament to RHB’s commitment in creating synergy in the financial services sector to provide our customers with better options and facilities that are sustainable,” he added.

Meanwhile, CGC president and CEO Datuk Mohd Zamree Mohd Ishak said the partnership with RHB marks another milestone in the financing of Bumiputera SMEs.

“We are confident that more banks will collaborate with CGC for guarantee services to reduce risk on the books of financial institutions and freeing up capital to allow increased capacity for more SME financing,” he said.

The collaboration for the new scheme is set to enhance the position of the existing selected portfolio in terms of its assets quality. It is also an avenue for better management of capital charge for the SME portfolio to provide competitive financing packages.

With WG-i Bumi, SMEs can leverage on the guarantee provided by CGC on a portfolio basis, which in turn is expected to create opportunities for better cashflow management for the SMEs compared to the traditional product offerings available in the market.