AmBank to disburse over RM20b 
in SME loans until 2021

The loans are expected to be distributed to between 6,000 and 7,000 companies over the next 3 years


AMMB Holdings Bhd (AmBank) aims to disburse over RM20 billion in loans to small and medium enterprises (SMEs) over the next three years, in line with its strategy to be among the top four players in the SME segment.

Group CEO Datuk Sulaiman Mohd Tahir (picture) said the bank disbursed a total of RM6.1 billion in SME loans to 2,200 customers in the calendar year ended Dec 30, 2018, up 30.6% from RM4.7 billion channelled to 1,500 customers in 2017.

“We expect to disburse over RM20 billion to between 6,000 and 7,000 companies out there from 2019 to 2021 as our focus is on growing Malaysian SMEs, which make up a significant portion of our business.

“It’s also in line with the government’s initiative to drive the SME growth,” he said at the AmBank’s BizRACE competition media briefing in Kuala Lumpur yesterday.

Going forward, the banking group is projected to disburse RM6.8 billion worth of SME loans in 2019, RM7.6 billion in 2020 and RM8.6 billion in 2021.

Driving the group’s SME growth are various initiatives such as creating products catered to smaller businesses and setting up centres dedicated to enterprise banking, commercial banking, mid-sized corporates and large corporates.

Sulaiman said the group has also invested in automation to speed up the loan approval process for SMEs from one week to within 24 hours.

“We’ve invested about RM23 million in this, to automate the process as sometimes, it takes months for the SMEs to receive financing. It’s now in the pilot stage and we hope to launch the first phase by May,” he said.

The bank is also expecting to launch an SME business banking service centre in the third quarter of 2019, with a dedicated team to assist SMEs in their daily needs.

As a result of the bank’s SME-centric schemes, AmBank is expected to post double-digit growth in SME loans up to 2021.

“We’re aiming for between 20% and 25% growth over the next two to three years. For the financial year ending March 31, 2019 (FY19), we’re expecting our overall loan growth to be higher than the industry since our large corporates growth is somewhat flat, mid-corporates are growing at industry speed of 4% to 5%, and our SME loans are growing at over 20%,” Sulaiman added.

The bank is also hoping to bring its non-performing loan (NPL) ratio down to 1% in FY20 by clearing up some RM600 million in its legacy books, although Sulaiman did not disclose the method of disposal.

“For the group, the NPL ratio is at about 1.6% to 1.7%, of which about RM600 million is comprised of two large corporations that are secured against properties.

“This is from four years ago before we embarked on our current strategy — when our focus was on large corporations and we got stuck. So, if we dispose of the properties, then the NPL will be about RM1 billion with an NPL ratio of 1%…that would be very good,” he said.

Recently, AmBank sold AmBank (M) Bhd (AmBank Malaysia) and AmBank Islamic Bhd’s NPLs totalling RM553.91 million to special-purpose vehicles (SPVs) under Aiqon Capital Group Sdn Bhd.

The private limited company is held by Ibrahim Hussain, the son-in-law of AmBank’s substantial shareholder and founder Tan Sri Azman Hashim.

Last month, the group said it would record an estimated net gain of RM229.94 million from the sale of the NPLs, which would be used by AmBank Malaysia and AmBank Islamic for working capital.

On the possibility of a cut in the Overnight Policy Rate (OPR) this year, which is predicted by some economists in light of global economic and financial conditions, Sulaiman said this would affect all banks’ profitability as there would be fewer opportunities to make money on interbank transfers.

“A reduced OPR is not good for banks, but it’s good for customers. A reduction in the OPR is intended to encourage investments. Hopefully, the volume and new loan growth can compensate for the impact on profitability.

“We’ll see if the central bank does reduce the OPR, since inflation is not really negative…it’s due to the reduction in oil prices,” he added.