ABM: Local banks remain supportive of O&G sector

KUALA LUMPUR: Commercial banks in Malaysia remain supportive and will continue to provide access to financing for viable businesses, including the oil & gas (O&G) sector, says the Association of Banks in Malaysia (ABM).

The ABM said all O&G cases have been given due consideration by the banks and credit evaluation is conducted on them, similar to loan applications by any other industries.

“Common reasons for loan rejection beyond ineligibility, include incomplete loan documentation and inadequate supplementary information required to support the banks’ assessment of cash flows and financial buffers of companies,” it said in a statement.

The statement was issued in response to an article published by a weekly newspaper, which stated that banks were now more cautious in their lending to companies in the O&G sector.

ABM said the delinquent loans ratio for the O&G sector stood at 0.1 per cent, while the impaired loans ratio increased to five per cent in the third quarter of 2017, mainly due to cash flow issues observed in service providers in certain upstream segments.

For the second quarter, delinquent loans ratio for the O&G sector were 0.2 per cent and impaired loans ratio at 4.5 per cent.

“However, risks to the banking system remained limited, as exposures to the O&G sector accounted for about 6.5 per cent of total exposures,” ABM said. - Bernama