Banks see some stress amid lower lending but made manageable via TRA
KUALA LUMPUR: Banks see some stress amid squeezed margins and lower lending targets due to the Covid-19 pandemic-related challenges, but the targeted repayment assistance (TRA) makes it manageable as the industry can gauge the risk factors and react accordingly.
Among others, CIMB Bank Bhd said that along with other Malaysian banks it has moderated the loan growth projection given the impact of the pandemic.
“At the start of the year (preCovid-19), CIMB Malaysia’s loan growth was expected to grow by six per cent to seven per cent. At the current juncture, CIMB Malaysia’s 2020 loan growth is expected to end at about four per cent to five per cent,” CIMB Bank’s spokesperson told Bernama when contacted.
However, the situation is manageable as the government’s move on TRA at the end of a six-month blanket moratorium has enabled banks to gauge the situation and act accordingly.
When asked about what would happen if there was another blanket three- or six-month moratorium, the spokesperson said the extension of the blanket moratorium will have an impact on the bank’s profitability and liquidity, and subsequently the wider economy.
“A further blanket moratorium would allow everyone, even those with high disposable income or not affected by the pandemic to benefit from payment relief, which is not productive in the current environment.”
It is optimal that assistance to borrowers is done in a targeted manner to ensure funds and resources are specifically channelled to individuals and businesses in need of help.
“All banks remain committed to extending assistance to those who are affected and have agreed to give approval for repayment relief to those who have lost their jobs or whose income has been reduced due to the pandemic. This has been extended to all B40 borrowers and micro enterprises where approvals are given automatically, upon responding to the banks.”
Furthermore, depositors and shareholders of banks which predominantly are institutional investors that manage funds on behalf of contributors or the public, such as Permodalan Nasional Bhd, Employees Provident Fund and Retirement Fund (Incorporated), need to be assured that banks can remain profitable to provide dividends and returns for the benefit of the rakyat.
It is also critical to ensure the banking system remains healthy and has the liquidity from repayments from its borrowers in order for the banks to finance new productive lending to help fuel economic recovery.
RHB Banking Group managing director Datuk Khairussaleh Ramli also said that from an asset quality perspective as a whole, banks see some signs of stress, however, this is manageable.
As of end-November 2020, RHB approved payment assistance for loan and financing facilities totalling RM11.8 billion to the retail segment.
“This includes providing payment assistance to more than 71,000 of our B40 and M40 customers, amounting to more than RM4.5 billion and to more than 1,300 small and medium enterprises (SMEs) including micro enterprises totalling RM3.7 billion.”
Overall, RHB has already provided financial assistance to approximately 123,000 individuals, SMEs and corporate customers with loan and financing facilities totalling RM19.85 billion, he said via email.