Bank Muamalat cuts loan growth target to 7%

Demand for loan will be sustained by the retail segment, including home, personal and vehicle financing

by HARIZAH KAMEL / pic by ARIF KARTONO

BANK Muamalat Malaysia Bhd revises down its loan growth outlook to 7% this year from the initial target of 13%, with demand from both households and businesses faltering due to Covid-19, said CEO Khairul Kamarudin.

He said demand for loan will be sustained by the retail segment, including home, personal and vehicle financing, adding that the modification loss has impacted the bank’s bottom line significantly.

“Because we are a small bank, most of our financing are based on the fixed rate, which causes higher severity. We are still targeting higher than the industry growth which is 3% as of July. Our total loan book is RM16 billion, of which RM10 to RM11 billion is already from the retail segment.

“We are also seeing some growth in small and medium enterprises, mainly contributed by Bank Negara Malaysia’s Special Relief Facility because of the 3.5% financing rate,” he told reporters after the launch of the bank’s Jariah Fund in Kuala Lumpur yesterday.

Commenting on the targeted moratorium extension, Khairul said they have identified 13,000 customers and have contacted all.

“The positive responses range between 8,000 and 9,000, but the ones that have come forward to apply are in a much lower number, about 5%.

“Based on our engagement, there are those who don’t need the moratorium extension, but we called because we know that they are in the vulnerable sector, that’s about 10% from those who responded,” he said.

The bank’s approval rate is about 80%, whereas the application is around less than 1,000 to date.

He also noted that Bank Muamalat needs to ensure that it is successful in restructuring targeted extension, in terms of the moratorium, to the targeted group by the end of September.

The bank has also unveiled its crowdfunding platform for social welfare projects called Jariah Fund.

It aims to help those in need and for the betterment of society through the application of financial technology (fintech) which Bank Muamalat has successfully developed solely based on internal expertise.

The platform uses FPX electronic payment method as a payment medium, whereby members of the public can make online donations in real time.

In the first phase beginning September this year until March 2021, the bank will work with five non-governmental organisations (NGOs), namely Yayasan Sejahtera, Yayasan Ikhlas, Yayasan Muslimin, The National Autism Society of Malaysia and Malaysian Association for the Blind.

These NGOs will act as the bank’s charitable partners to monitor the selected campaigns posted on the platform.

The selected campaigns are charitable projects under the education, health and economic empowerment sectors, including chilli cultivation, string hoppers sales project, educational projects for Orang Asli children and assisting those affected during the Movement Control Order period.

For the first phase, Bank Muamalat is targeting to channel approximately RM40,000 in funds to selected beneficiaries through six community-based projects.