CGC aims to reduce NPL ratio by improving asset quality

KUALA LUMPUR: Credit Guarantee Corp Malaysia Bhd (CGC) aims to improve its asset quality in order to reduce its overall non-performing loan (NPL) ratio to single digit from the current 12%-13% in three years’ time, said its president and CEO Mohd Zamree Mohd Ishak.

“Last year our NPL (ratio) was at 15% to 16% and now we are looking at bringing it down to below 10%. Currently, what we are doing is cleaning up our books and, at the same time, increasing our asset quality, in terms of the quality of the credit that we underwrite,” he told reporters after launching its direct financing facility for women entrepreneurs called BizWanita last Friday.

Zamree said CGC has allocated an initial sum of RM30 million for BizWanita, which is expected to assist 500 small and medium enterprises (SMEs) in the country.

BizWanita offers financing ranging from RM20,000 to RM300,000 with a financing rate as low as base financing rate (BFR) plus 0.20%, with repayment tenures from one to seven years.

The facility complies with syariah principles for Islamic products under the Commodity Murabahah concept.

Women between 21 and 60 years old with a business licence registered in Malaysia for a localowned company with at least 51% shareholding are eligible to apply for financing under BizWanita.

“Within the next three months, we aim to approve RM7 million worth of financing for this product,” Zamree said.

To date, CGC has approved 17 applications valued at RM2.45 million under BizWanita, since its soft launch on Oct 1, 2015.

Meanwhile, despite the challenging economic situation currently, Zamree said the company is optimistic of achieving its RM3.6 billion loan volume target this year, adding it has approved 6,900 loans worth RM2.6 billion as at September 2015. “We are having a challenging time currently and things are not going to change in the very near future, but we are optimistic that it will not deteriorate so much where we cannot manage the situation.”

Deputy Finance Minister II Datuk Johari Abdul Ghani, who attended the launch of BizWanita, said women-owned businesses constitute about 19% of the total business establishment in the country. They include the food and beverage, trading, plantation, construction, finance, as well as oil and gas industries.

CGC provides credit guarantee to SMEs and business community to obtain credit facilities from financial institutions. Currently, 17 commercial banks, 15 Islamic banks and seven development financial institutions are participating in CGC’s guarantee scheme.