AmBank expects 15% growth in SME loans

KUALA LUMPUR: AmBank (M) Bhd is expecting a 15% growth from its small and medium-enterprise (SME) loan segment for the financial year 2017 (FY17), driven by the banking group’s Top Four Strategy that it embarked on last year.

Group chief executive officer (CEO) Datuk Sulaiman Mohd Tahir said growth in the SME loan segment would be supported by the bank’s focus on SMEs and mid-corporations, as well as a gross domestic product growth projection of 4.5% this year.

“In terms of loan growth, we foresee this to be around 6% to 7% for FY17, given the infrastructure projects that have been rolled out and the recovery in the economy.

“This is clearly a jump based on our Top Four Strategy initiative that we embarked on,” he told reporters after witnessing the signing ceremony between AmBank and Credit Guarantee Corp Malaysia Bhd (CGC) to continue the SME Portfolio Guarantee Scheme here yesterday.

The scheme is a partnership between the parties to extend an additional RM200mil financing for eligible SME businesses. Last November, the sixth-largest lender in the country said it expected total loan growth of 5% for its financial year ending March 31, 2017 and it was positive on loan growth for the SME space since it experienced negative loan growth for the segment in 2015.

Sulaiman said overall net interest margin (NIM) for the bank should be better since the focus has also been on SMEs and retail banking.

“We are concerned about competition for deposits because it can be quite stiff and can erode margins, but we think NIM will improve since we observed a recovery in the last quarter,” he said, adding that it expected a 2% growth in NIM against 1.94% last year.

On talks of a possible merger between AMMB Holdings Bhd and RHB Bank, Sulaiman said the bank has not received any proposals of a merger intiation.

“This story has been circulating for some time. I think it is more of a re-circulation of an old story. And as far as I am concerned, there is nothing on – there are no proposals.

“If it comes, it comes, but my view is that we have a lot of work to do at AmBank in terms of driving the right kind of strategies to build our business,” he noted.

On the SME Portfolio Guarantee Scheme, Sulaiman said this was a continuation of the earlier scheme launched in September 2016, where a sum of RM150mil in tranche one was allocated and fully-subscribed within five months.

“Under this scheme or trache two, eligible SMEs can apply for financing facilities of up to RM1mil from AmBank SME with repayment tenure of up to seven years.

“A total of 70% of the principal financing amount will be guaranteed by CGC,” said Sulaiman, adding that the latest tranche, available since Feb 22, was part of the banking group’s strategy to perform well in the SME space.

As the scheme involved smaller tickets, it would be looking at launching tranche three. An average of 300 customers have benefitted from tranche one.

Meanwhile, CGC president/CEO Datuk Mohd Zamree Mohd Ishak said there were still opportunities for SMEs in the present challenging market condition, taking into account of infrastructure projects such as the Pan Borneo highway and Pengerang Petroleum complex.

To date, CGC has made available over RM9.1bil worth of guarantee schemes benefitting about 19,000 SMEs.