Today's Pick (14/03/13/40/965) Alliance banks on SMEs, sees above-average loan growth for the segment this year

Alliance banks on SMEs, sees above-average loan growth for the segment this year

PETALING JAYA: Alliance Bank Malaysia Bhd foresees an above-average loan growth for its small and medium enterprises (SMEs) portfolio this year, given the long-term strategies of SMEs and Government projects that would benefit them.

Alliance Bank head of group business banking Steve Miller said the bank was optimistic about the market, as SMEs generally took conservative long-term views on their investments.

“Assuming everything stays as it is and there are no hiccups in the economy, we think our SME business can outgrow the market,” Miller said, adding that Alliance Bank had about 10% market share at present.

He said SMEs would also reap the benefits of big projects under the Government.

“Many of the big projects are starting to gain momentum and that flows through the value chain and comes down from the big players to the SMEs,” he said.

In line with this expectation, the bank has signed a portfolio guarantee agreement with Credit Guarantee Corp Malaysia Bhd (CGC) to make access to financing for SMEs easier, beginning with an RM50mil initial tranche.

Under the agreement, CGC, a credit guarantee provider for local SMEs, will provide 70% guarantee cover of the approved total principal amount undertaken by the SMEs, and assist in verifying the credibility of the applicants in consultation with Alliance Bank.

Miller said that the RM50mil was only an initial tranche, as the bank would consider the second tranche in the second half of its financial year 2013.

CGC managing director Datuk Wan Azhar Wan Ahmad said that with the portfolio size of RM50mil, CGC's aim was to reach out to about 300 SMEs from various sectors, offering a loan range of between RM100,000 and RM300,000.

“Since the inception of the first portfolio guarantee arrangement in 2009, we have provided guarantees to the amount of about RM605mil worth of loans through this delivery system,” he said.

CGC's non-performing loans (NPL) have been on the decline from 4.8% in 2010 to 4.3% in the following year and 3.8% last year.

“Our NPL has come down and we hope it will continue to reduce as we enhance the quality of loans,” he said, adding that CGC was looking at smaller types of loans as the impact was greater on SMEs.

Last year, CGC guaranteed loans in excess of RM1bil, benefiting over 3,000 customers. Wan Azhar is confident that CGC could double the figure this year.

“We are more focused on graduating' the SMEs from the guarantee mechanism and Government support. We also have more products in the pipeline in collaboration with more banks,” he said, adding that CGC would be signing with four more institutions in 2013.

Source: The Star

Date: 14 March 2013

Today's Pick (14/03/13/40/965)