KUALA LUMPUR: The Association of Banks in Malaysia (ABM) says its members, comprising 27 commercial banks, have remained supportive and will continue to provide access to financing for viable businesses including the oil and gas (O&G) sector.
In a statement today, ABM said all O&G cases had been given due consideration by the banks.
Credit evaluation is conducted on O&G companies similar to loan applications by any other industries.
“Feasibility studies such as stress test analyses, due diligence and credit evaluation are conducted as part of the standard assessment procedure to determine eligibility and viability,” it said.
ABM said common reasons for loan rejection beyond ineligibility include incomplete loan documentation and inadequate supplementary information required to support banks’ assessment of cash flows and financial buffers of companies.
It said delinquent loans ratio for the sector stood at 0.1 per cent while impaired loans ratio increased to five per cent in the third quarter of 2017, due mainly to cash flow issues observed in service providers in certain upstream segments.
It said corresponding figures for the second quarter of 2017 were 0.2 per cent and 4.5 per cent respectively.
However, it said risks to the banking system remained limited as exposures to the sector accounted for about 6.5 per cent of total exposures.
ABM said besides that, the banking industry together with Bank Negara Malaysia had been engaging with the Malaysian Petroleum Resources Corporation (MPRC) to better understand developments in the sector and disseminate information on avenues for assistance available for financially-distressed companies.
“Viable corporate borrowers with multiple financial creditors can approach the Corporate Debt Restructuring Committee for assistance to work out feasible and market-driven debt resolutions through mediation,” it said.