AmBank sees temporary pick-up post-0% GST

Banking group collaborating with a local telco for an e-wallet, to be launched next month


AMMB Holdings Bhd (AmBank) has seen a pick-up in hire purchases and credit card spending since the zero-rating of the Goods and Services Tax (GST) in June.

However, the bank maintains its 6% loan growth target for the year, stating that the pick-up is expected to be temporary and will soon normalise as it is mostly driven by “pent-up demand”.

AmBank group CEO Datuk Sulaiman Mohd Tahir (picture) said the increase is largely due to pent-up demand among customers who were waiting for the GST to be zero-rated and forward-purchasing among customers who have chosen to purchase cars before the re-introduction of the Sales and Services Tax (SST) in September.

The banking group also saw more spending on its credit cards and cards outstanding segment due to the three- month tax holiday period.

“There is definitely an increase since the GST was zero-rated as it was meant to spur consumer sentiment. It will drive a pick-up as some of the more expensive cars are more affordable, and we see some bouts of good traction after the zero-rating of GST,” Sulaiman told reporters after the group’s AGM in Kuala Lumpur yesterday.

He said the zero-rating of the GST, possible toll abolishment and the overall operating environment have led to “very positive” sentiment among small and medium enterprises and the retail sector.

“We’ve always been priming our economy with big infrastructure projects — always government-led. Now, we’re moving towards being more people-or private company-led, which I think is positive.

“We hope by the third or fourth quarter of this year, once there is more clarity on the direction of the new government and Budget 2019 is announced, the market will pick up,” Sulaiman said.

Meanwhile, the banking group has begun collaborating with a local telecommunications company for an e-wallet, to be launched sometime next month.

The e-wallet will allow users to make cashless payments using Quick Response (QR) codes, similar to countries such as China where customers make QR code payments via applications like Alipay or UnionPay.

“We already have over 50,000 merchants and telcos have a lot of subscribers, so availing wallet payment will allow people to make cashless payments, as well as reload using their AmBank accounts or transfer money from other bank accounts.

We’ve already piloted the e-wallet and it’s been very successful,” Sulaiman said.

While the investment cost of the initiative was not revealed, AmBank CFO Jamie Ling said the group typically allocates some RM120 million to RM160 million in capital expenditure per annum on running the bank, which includes digitalisation measures such as the e-wallet.

On investigations into 1Malaysia Development Bhd (1MDB), Sulaiman reiterated that AmBank, which was previously linked to the 1MDB scandal, has not been approached by the 1MDB task force.

“They are in the middle of the investigation, and we remain fully cooperative with anyone who requires information. We have been cooperating with the likes of the Malaysian Anti-Corruption Commission and the Royal Malaysia Police even previously, so we will continue to do so,” he said.

Reports surfaced in 2015 that some RM2.6 billion in funds had been channelled into the personal accounts of then- Prime Minister Datuk Seri Mohd Najib Razak, who later denied any wrongdoing. AmBank was then fined RM53.7 million by the central bank for breaching certain regulations, believed to be linked to the aforementioned case.

The bank also does not expect any major changes in national monetary policies, following the appointment of Datuk Nor Shamsiah Mohd Yunus as Bank Negara Malaysia (BNM) governor.

“I think she’s an old hand at this business, a true-blue BNM person, so I would imagine whatever policies or directions with regard to BNM’s stand in handling the economy would be consistent with the way it’s been done all these years.

“We are quite comforted by that. Similar to former governor Tan Sri Muhammad Ibrahim, he’s also a true-blue central banker, so we don’t see any surprises,” said Sulaiman.