Agrobank projects conservative financing growth for 2019

It is forecast to channel up to RM290m to micro-enterprises, according to CEO

By AFIQ AZIZ / Pic By ISMAIL CHE RUS

Agrobank — formerly known as Bank Pertanian Malaysia Bhd — is expected to sustain its financing portfolio with a conservative growth of RM1.2 billion this year, within the same level achieved in 2018.

President and CEO Syed Alwi Mohamed Sultan said the bank has channelled up to RM10.7 billion in financing last year, slightly passing the RM10.5 billion targeted earlier.

“As for 2019, we are projecting about the same growth of RM1.2 billion, as what was achieved in 2018.

“As of February, our financing has grown by RM47.6 million compared to December last year,” he told the press at the Agrobank Business Dialogue in Kuala Lumpur yesterday.

In 2017, the government-owned bank recorded an increase in financing value of RM9.5 billion, with a growth of about 9% compared to the previous year’s figure.

Syed Alwi said its non-performing loan (NPL) rate also improved from 4.5% in 2017 to 4.1% last year.

“We have made a lot of collections last year, as well as strengthening our assets quality and the underwriting (portfolio).

“The NPL improvement came from all sectors, especially in the microfinancing segment,” he said, adding that the bank aims to trim the NPL rate further to 4% this year.

The bank’s NPL has significantly improved over the past decade. In 2011, Agrobank served around 24.7% of default loans.

Syed Alwi added that Agrobank is expected to channel up to RM290 million from its microfinancing schemes to businesses, higher than the RM280 million outstanding balance recorded last year.

Microfinancing is small business loans ranging from RM1,000 to RM50,000 for micro-enterprises — meant to help corporations in terms of working capital and capital expenditure.

The 50-year-old bank was established with a mandate to provide financial access and credit to the development and growth of the agriculture community in Malaysia, driven by a policy set forth by the Ministry of Agriculture and Agro-based Industry (MoA).

Meanwhile, MoA Minister Datuk Salahuddin Ayub — who was present at the dialogue — said Sarawak has offered 100ha of land to the ministry to develop an agro-food farm project.

He said the MoA plans to utilise the land for the animal feed industry, including maize production.

He said the move would allow the country to save up to RM3.2 billion in the importation of cereals due to the shortage in local supply.

Currently, Malaysia has a total of 1,000ha of maize plantations in Johor, Kedah and Terengganu.

“We plan to use parts of the land to develop our own maize farms. We can now expand our own animal feed industry for our own livestock,” he said.

At present, Malaysia imports about three million tonnes of maize annually from Argentina.

Neighbouring countries like Thailand and the Philippines are already able to produce their own maize for animal feed production supplied to the livestock market.

“Although the farms could not 100% produce sufficient maize for local demand, they can contribute to lowering down our livestock price tags,” Salahuddin said.

The MoA launched its new direction last month called “Priorities and Strategies 2019-2020”, and one of the main targets is to increase the self-sufficient ratio (SSR) for rice, livestock and dairy products.

Currently, SSR for rice stands at 71.9%, while dairy products are at 58%. Salahuddin said the MoA also aims to increase these ratios further by 5% and 3% respectively within five years.

The ministry is expected to launch the second wave of the National Feedlot Project by the middle of this year to push up the SSR for cattle feed and feeder calves.