by NG MIN SHEN / pic by TMR filepic
MALAYSIA Building Society Bhd (MBSB) is making further inroads into the small and medium enterprise (SME) segment, with a financing scheme for Telekom Malaysia Bhd (TM) vendors as part of efforts to boost its corporate business division.
Its president and CEO Datuk Seri Ahmad Zaini Othman (picture) said the group has been financing SMEs over the last two and a half years, with previous efforts on supporting larger-scale contractors for contracts awarded by the government and government-listed companies.
“The collaboration with TM is our latest initiative to penetrate the right SME segment. We have allocated RM500 million for this financing scheme, and we hope to disburse most of it, if not all, by next year or so,” he said at the signing ceremony in Kuala Lumpur recently.
The two parties inked an agreement for MBSB to offer its Islamic financing facilities to TM’s vendors, as well as manufacturers and contractors registered with TM.
Under the scheme, eligible vendors are entitled for financing of up to RM3 million per contractor, or 80% of the contract value awarded by TM — whichever is lower — on a three-year contract.
The scheme is in line with MBSB’s aim of raising its corporate banking segment to 30% of the group’s business from the current, as well as to 70% in retail banking.
“Our corporate loan portfolio is growing fairly well. Our growth is about 3% to 4% on a consolidated basis on the bank’s platform. We’re looking at that range for the financial year ending Dec 31, 2017,” Ahmad Zaini said.
The non-bank lender is currently in the process of acquiring RM644.95 million from Asian Finance Bank Bhd (AFB). AFB is one of three foreign banks with licences to offer Islamic banking services in Malaysia; the acquisition will allow MBSB to become a full-fledged banking entity.
“We should conclude our acquisition of AFB by next February. We will be able to provide more Shariah-compliant products and services to customers with a banking platform. We’re looking into featuring working capital financing and trade financing, among others,” Ahmad Zaini stated.
Interest rates under the scheme with TM will be based on the Base Lending Rate. Vendors may apply for the financial facilities at the letter-of-intent stage in the procurement process.