KUALA LUMPUR: AmBank (M) Bhd aspires to become the small and medium enterprises’ (SMEs) bank of choice for the business sector, adding that the bank had reconfigured its business to better serve SMEs for the last three years.
“We have for the past years reconfigure our business banking segment to match the needs of the SME market. If you see the banks in the country, most banks are divided either corporate or retail. We at AmBank want to occupy that space in between,” said AMMB Holdings Bhd group chief executive officer Datuk Sulaiman Mohd Tahir.
“For the most part, banks that have been successful in the SME space are foreign banks. AmBank would very much like to be the bank of choice for SMEs. Going forward, I believe we’re already on our way there.”
He explained the SME segment is particularly attractive to the group given that successful SMEs do not remain stagnant. They grow to become mid to large capitalised (caps) companies that will continue doing business with AmBank.
“In 2017, the bank disbursed RM6.14 billion loan to SMEs, 30.6 per cent more than RM4.6 billion in 2017. This is a remarkable growth as three years ago we were starting at zero growth for this segment,” he said at a media briefing today.
“We want to maintain this double digit growth within the SME lending space going forward.”
Data from SME Corp shows Malaysian SME landscape are expected to contribute up to 41 per cent to the gross domestic product (GDP) and employs 65 per cent of the population by 2020.
Despite its aspirations, AmBank’s current market share of SME lending is at seven per cent.
Ambank also did not meet its target of approving RM7 billion worth of loans for SME and related businesses in the financial year ended March 31, 2018 (FY18).
“We have not hit RM7 billion but our SME loan business is still growing higher than the industry average. That said, we were not able to hit that because of multiple external factors last year,” said Sulaiman.
“We had expected the economy to pick up after the 14th General Election but what happened was that Bank Negara Malaysia revised the GDP growth multiple times over. We hope that we can maintain the same double digit growth momentum in our SME lending again this year but that is also up to forces beyond our control like the economy.”
Sulaiman also shared the group's total non-performing loan (NPL) including that of SMEs is at RM1.6 billion or 1.6 per cent of the group's total portfolio.
He explained that around RM600 million are from legacy large-cap companies.
“The RM600 million NPL are mostly from two large-cap companies, one of which is in the property segment, are part of our legacy business before we started focusing on the SME segment,” said Sulaiman.
“We are planning to dispose this NPL within this financial year and bring down our NPL to one per cent of the total portfolio.”
As of FY18, AmBank is the sixth-largest banking group by assets in Malaysia, with a market cap of some RM11.6 billion and asset size of RM137.9 billion.