News

CIMB Bank uses data analytics to expedite targeted aid for customers

Aug 4, 2020
KUALA LUMPUR: CIMB Group Holdings Bhd has rolled out a seamless targeted payment programme to customers upon expiry of blanket moratorium period on September 30.

The group said CIMB Bank Bhd and CIMB Islamic Bank Bhd were leveraging on data analytics to identify most affected customers to expedite the programme.

This ensures seamless customer experience as all processes would be simplified with a quick turnaround time, and proactively engage with affected customers.

The programme is applicable to individual customers or borrowers who have lost their jobs since January 1 this year.

Those who remain unemployed will be given a three-month payment relief.

The group said individual borrowers who had suffered a decline in income were eligible for a commensurate reduction of monthly payments for at least six months.

This includes hire purchase financing where affected customers will be offered revised monthly payments, together with an extension of tenure

Affected small medium enterprises (SMEs), corporates and individuals will be offered several options.

This includes an extension of the existing relief programme, profit/interest servicing only, possible extension of the loan/financing tenure to enable lower monthly instalments and amending other terms and conditions of the loan/financing where appropriate.

CIMB Group chief executive officer Datuk Abdul Rahman Ahmad said it would continue to provide supports tailor-made to the needs of its financially affected group of customers.

''As part of our commitment to provide a seamless customer experience, CIMB will simplify and expedite the application and approval process.

''As the end of the blanket moratorium is fast approaching, impacted customers are encouraged to contact us as soon as possible to discuss options with CIMB,'' he said in a statement today.

The group said an SMS would be sent to more than 300,000 individuals and 10,000 SMEs from August 3.

It advised them to follow the simple instructions and complete their applications by August 20.

Those who do not receive an SMS but are anticipating difficulties in commencing payments after September 30 are encouraged to get in touch with the bank from August 7 until September 7.

CIMB has provided the six-month moratorium to help ease cash flow and provide breathing space for Malaysians at the peak of the Covid-19 pandemic.

As at end-June, the moratorium had benefitted over 1.25 million retail customers and about 16,000 SMEs and corporate clients in terms of cash flow alleviation to help them face the challenging environment, CIMB said.

It also approved over RM1 billion of relief funds to SMEs, of which RM700 million was under the Bank Negara Malaysia's Special Relief Fund.

Uncertainties weigh on banking stocks

Aug 4, 2020
Uncertainties weigh on banking stocks
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PETALING JAYA: Banking stocks continue to be battered down despite the surge in loan growth in June due to unabated concerns over the impact on financial institutions when the blanket six-month loan moratorium ends in September.

Shares in Public Bank Bhd closed 44 sen lower at RM16.56 apiece yesterday, while Malayan Banking Bhd (Maybank) and CIMB Group Holdings Bhd fell 17 sen and 13 sen to RM7.50 and RM3.46, respectively.

 

Hong Leong Bank Bhd, on the other hand, plunged 70 sen to RM14.30, while RHB Bank Bhd declined by 10 sen to RM4.92.

Loan approvals and applications in June have exceeded analysts’ expectations thanks to the cheap lending cost.

 

This year, Bank Negara went full-throttle to boost the Malaysian economy and cut interest rate by four times due to the coronavirus (Covid-19) fallout.

In July, the central bank cut its overnight policy rate (OPR) to 1.75%, the lowest since 2004.

The cut in interest rate could impact banks’ earnings moving forward and potentially result in higher loan loss provisions due to the end of the blanket moratorium.

Maybank IB Research said the overall loan growth in June was higher than expected as sentiment improved from the partial relaxation of the movement control order (MCO) and the stimulus package announced by the government to buffer the economy from the Covid-19 crisis.

It said the banks’ loan growth grew 4.1% year-on-year (y-o-y) in June, which is higher than its estimation of 2% for the year.

Interestingly, the banks’ asset quality improved in June to 1.46% in gross impaired loans (GIL) from 1.55% in May.

Maybank IB expected the banks’ asset quality to remain at the same level until September due to the loan moratorium as consumers and SMEs have their credit positions frozen for now.

“As such, the current GIL numbers do not fully reflect the actual economic situation, ” it said in a note to clients.

AmInvestment Bank Research said household loans gained traction to 3.5% y-o-y from higher levels of mortgages and loans for the purchase of securities through stronger disbursements.

Meanwhile, non-household loan growth was unchanged at 4.9% y-o-y.

“Loan disbursements have improved from the low levels in April and May 2020, ” AmInvestment said in a report.

On loan application, the research house said the banks’ loan applications rebounded to 8% y-o-y due to higher applications for passenger cars, residential property loans, credit cards and personal loans.

This compared to a contraction of application of 39% y-o-y in May 2020. Loan approval in June has improved significantly to 12.7% y-o-y in June compared to a contraction of 54.4% in May.

“With the dovish statement by Bank Negara in the recent monetary policy committee statement, we are expecting another OPR cut of 25 basis points in the second half of this year to 1.50%, ” AmInvestment said.

Analysts are mainly neutral on the targeted loan moratorium replacing the blanket moratorium starting October.

However, UOB Kay Hian Research warned that the large-scale targeted moratorium starting October could lag GIL formation and lead to overhang in the banking sector’s performance.

“We expect the overall industry GIL ratio to potentially peak by end-2021, ” it said.

UOB Kay Hian reckoned that the banking sector would post a more meaningful recovery from the second quarter of 2021 onwards.

“While it is too early to gauge the overall level of customers that would require the targeted loan assistance when the automatic loan moratorium ends in September, certain banks have recently provided guidance of up to 30%.”

Last month, Prime Minister Tan Sri Muhyiddin Yassin announced that the blanket loan moratorium would be replaced with a targeted moratorium in October for individuals who have lost their jobs and who have yet to find new jobs.

The targeted loan moratorium will be for three months and a further extension could be granted if individuals are still unsuccessful in securing jobs.

UOB Kay Hian said the banking sector is trading at 0.85 times 2021 forecast price-to-book ratio, which is only slightly below the Global Financial Crisis low of 0.95 times and broadly correlates with its current 2021 sector return on equity of 7.5%.

“We think it is too early to upgrade the sector as asset quality uncertainties persist, with banks still unable to accurately estimate the level of provisions required post-loan moratorium in end-September, ” it said.

 

 


MISC focusing on long-term contracts in offshore, LNG segments for earnings sustainability

Aug 3, 2020
KUALA LUMPUR: MISC Bhd will focus on securing more long-term contracts, supported by existing long-term contracts in the offshore and liquefied natural gas segments, to protect the shipping giant against market downturns.

The move was also aimed at achieving a sustainable level of secured profit, president and group chief executive officer Yee Yang Chien said.

MISC's business strategies remain fundamentally geared towards pursuing long-term sustainability, Yee added.

''Last year, we were able to deliver about US$1.1 billion in new investments, including a new investment project secured early 2020, with the bulk of the efforts in 2019.

''The group's existing long-term contracts would continue to provide earnings resiliency. Our petroleum shipping business's exposure to the volatility of freight rates is reduced by having a larger proportion of our fleet on term charters as compared to spot market,'' he told the New Straits Times recently.

MISC will continue to push forward its growth agenda for this year and confident that projects that are being pursued will be realised.

Yee said MISC's petroleum shipping arm, AET Tanker Holdings Sdn Bhd (AET), would look to attain a good mix of term and spot charters by focusing on more long-term charters and explore expansion opportunities within the niche shuttle tanker to help mitigate any downturn in the cyclical market.

MISC's core businesses are LNG asset solutions, petroleum and product shipping, offshore business as well as marine and heavy engineering.

Yee noted that Moody Investor Service's outlook on petroleum tanker business, a segment which is part of MISC's four core businesses, was rated stable, as tanker rates had benefitted tremendously from the high demand of floating storage.

''However, charter rates are expected to return closer to long-run averages in the second half (2H) of 2020. This is consistent with our views in relation to the unexpected Saudi Arabia-Russia price war which created a spike in tanker spot rates.

''The price war had resulted with sudden flood of low-priced oil in the market, leading to surge in shipping demand. The segment was subsequently supported by high demand for tankers to be used as floating storage amid the slump in global oil demand due to the Covid-19 pandemic,'' he said.

He added that this had positively impacted MISC's petroleum segment results for 1H of 2020 as the high charter rates benefited MISC's tankers operating in the spot market.

About 29 per cent of MISC's petroleum fleet was in the spot market in the first quarter (1Q) of 2020.

Yee said its strategy to achieve a sustainable level of secured profit on the back of long-term contracts placed MISC in a good stead to weather the economic downturn, and subsequently leverage on the oil market recovery over the next few years.

''As such, other than from the recent Gumusut-Kakap arbitration impact, we do not expect MISC's Ebitda (earnings before interest, taxes, depreciation, and amortization) to drop significantly from the economic downturn,'' he said.

MISC was awarded a 15-year firm period contract from Sabah Shell Petroleum Company (SSPC) in November 2012 for the construction and lease of the Gumusut-Kakap semi-floating production system (FPS).

On September 2, 2016, MISC filed a case against SSPC, claiming for outstanding additional lease rates, payment for completed variation works and other costs.

SSPC then filed a counterclaim for alleged defective work and limited functionality of the semi-FPS, among other things.

On April 8 this year, the arbitration award was announced in favour of SSPC.

When asked further on the impact of Covid-19, Yee said MISC's earnings were not severely affected by the pandemic except for its heavy engineering segment.

''Our financial performance continues to remain stable despite the challenging external environment as it is underpinned by long-term contracts particularly from LNG and offshore segments.

''The heavy engineering segment remains committed to focus on resource optimisation and competitiveness, as well as diversifying into new business opportunities, namely onshore and renewable segments,'' he said.

Given the greater global focus on adoption of clean energy, Yee pointed out that long-term prospects for the LNG market post-Covid-19 remained bright.

In addition, he said given the sharp downturn in the oil industry and with the low oil price environment, it was very likely that most of the planned upstream contract awards by oil majors in 2020 would be deferred.

Nevertheless, several FPSO projects in Brazil, one of the target markets for MISC's offshore business, have been resilient compared to other parts of the world.

''Post-Covid-19, the overall oil market is expected to gradually recover over the next few years, and we will be well-positioned for the market recovery.

''The group will continue its business development efforts in the focus regions of Southeast Asia, Middle East and the Americas including Brazil for the offshore business segment.

''One of the long-term trends we see is the shift towards the greater use of low-carbon marine fuels such as LNG. We have already started to explore this trend, for example, through the increase in LNG dual-fuel tankers in our petroleum fleet and tapping the LNG bunkering market,'' he said.

Naim to utilise RM90mil from land sale as dividend

Aug 3, 2020
Naim to utilise RM90mil from land sale as dividend
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KUCHING: Naim Holdings Bhd intends to utilise RM90mil of the proceeds from the sale of industrial land in Bintulu for cash dividend payout to its shareholders.

This translates into a dividend per share of about 18 sen based on the company’s 500.74 million shares in issue (net of 13.06 million treasury shares), said Sarawak’s leading property developer as it provided details on how the proceeds from the land sale would be used in a filing with Bursa Malaysia on Thursday.

 

Naim said the cash dividend is to reward shareholders for their investment and continued support of the group. Naim shares finished 6 sen higher at 88 sen last Thursday.

Wholly-owned subsidiary Petrochemical Hub Sdn Bhd (PHSB) inked a sales and purchase agreement (SPA) with Sarawak Economic Development Corp (SEDC) on July 17 to dispose of 405.6 hectares in Kidurong Industrial Estate for RM340mil cash.

 

Last Thursday, PHSB entered into a supplementary agreement with SEDC to amend and vary the terms of the SPA so as to cater for the inclusion of new provisions in relation to the requirement for Naim to obtain the approval of its shareholders as a condition precedent to the completion of the SPA.

The proposed disposal is expected to be completed in the fourth quarter of 2020 (4Q20).

Naim is expected to make a gain of RM110.17mil from the land disposal. The disposal consideration represents a premium of RM153.17mil (81.98%) to Naim’s cost of investment in the said land of RM186.83mil.

The company said the bulk of the proceeds or RM117mil would be used for repayment of existing bank borrowings, which is expected to result in annual interest cost saving of about RM5.3mil based on the group’s weighted average interest rate of about 4.53% as at June 30,2020.

As at Dec 31,2019, Naim group’s total borrowings stood at RM483.5mil. This will be reduced to RM366.5mil after the partial repayment and the gearing will be reduced to 0.27 times from 0.36 times.

Naim intends to set aside RM75mil of the sale proceeds as working capital for the group’s ongoing and future property development projects, RM15mil for capital investment and the balanced RM43mil as estimated expenses in relation to the land disposal.

The ongoing projects include Kuching Paragon, which comprises two condominium towers called Sapphire on The Park with gross development value (GDV) of RM170mil. The two towers are now about 64% and 38% completed and scheduled to be completed by 1Q21. A third tower was completed earlier.

The other ongoing project is in Miri Southlake Permyjaya, which comprises the development of landed affordable and medium-priced residential houses with an estimated GDV of RM164mil.

These new homes are in various stages of construction and are expected to be completed by 2Q22.

On future projects, Naim said it planned to build 500 units of affordable and medium-priced houses in Miri, Kuching and Bintulu over the next two years, with an indicative GDV of RM185mil. However, details of these projects have yet to be finalised at this juncture.

On the RM15mil allocation for capital investment, Naim said it would be utilised to fund the group’s proposed investment in an industrialised building system (IBS) plant in Miri.

“The total estimated investment costs, which consist of, inter-alia, acquisition of land, construction of factory as well as acquisition of the IBS plant and machineries, are approximately RM30mil.

“The proposed investment is part of the group’s long-term plan to accelerate the development of affordable houses in major towns of Sarawak as the construction period is expected to be shortened with the IBS technology in place, ” it added.

Naim group managing director Datuk Hasmi Hasan told StarBiz recently that the company would use technology from an established Chinese IBS manufacturer in setting up the plant, which is expected to be operational early next year.

 

 


Breathing space for borrowers and banks

Jul 30, 2020
Breathing space for borrowers and banks
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PETALING JAYA: The targeted extension of the moratorium is granting both borrowers and banks some breathing space, as Malaysia recovers from the coronavirus (Covid-19) pandemic.

Borrowers who are struggling to start repaying their loans come October now have their burden eased for at least three to six months.

 

Banks will finally see more inflow when the blanket moratorium ends in September and when the targeted moratorium kicks in, this will allow the financial institutions to better manage their non-performing loans (NPLs).NPLs were expected to spike starting October but the targeted moratorium has now given banks the leeway to delay the eventual increase and to better contain it.

Equitiestracker Holdings Bhd head of research Lim Tze Cheng said the targeted moratorium benefits both ways, where borrowers facing difficulties will not be forced into bankruptcy and banks will be able to prevent their NPLs from blowing up.

“Many people are pessimistic, thinking that the moratorium is something bad for the banks.

“Many forgot that the purpose of the moratorium is to prevent massive NPLs on the banks.

“The NPLs may increase substantially after the moratorium, but it would have been much worse without one, ” he said, adding that it was just a timely shift of collection.

UOB Kay Hian head of research Vincent Khoo said while it was good to provide assistance to those who needed it, there could also be a problem of overhang if the economy and the job market did not improve.

He added that investors recognised that there are continuing overhang issues which will be a drag on the economy and recoveries will be less certain.

“All eyes are on the first-quarter numbers next year to get a better gauge of what is the level of the NPL.

“Banks are already making assessments to increase their credit charge and even though the accounts may not be NPLs, they take a more proactive approach to try to be prudent in their credit cost expectations, ” said Khoo, adding that this was a forward-looking assessment, combined with prudence.

A banking sector analyst said in the near term, the NPLs will still look quite well contained but the key impact would be asset quality, as the targeted moratorium would help to contain the asset quality outlook over the near to medium term, at least until the first quarter next year.

“That means any meaningful deterioration may only start to be seen in the second quarter of 2021 onwards.

“But because banks are allowed to frontload provisions, it does not necessarily mean that provisions will not rise in 2020, ” he said, adding that the key question the market has is to what extent the NPLs and the provision impact and the targeted moratorium will delay the recognition of NPLs.

He also said that NPLs should only start to spike next year and not this year.

“The targeted moratorium is nothing unexpected and there is not much impact to earnings.

“That’s why if you look at the banking counters post-announcement, there was not much movement.

Out of nine listed banking counters yesterday, five rose while four declined.

BIMB Holdings Bhd led the advancers with a 3.52% or 12-sen increase to RM3.53, while Alliance Bank Malaysia Bhd was the top loser among banking counters yesterday with only a 1.38% or three-sen decline.

said the market took the news positively, as the impact to NPLs would not be as severe and even with the modification loss, it was only a one-off thing.

Meanwhile, Socio-Economic Research Centre (SERC) executive director Lee Heng Guie said the targeted approach would be better than the blanket moratorium, as it allowed banks to conduct their own assessments.

“This is more flexible and more targeted, allowing banks to better allocate their resources according to the financial positions of the individual borrowers.

“Now that we know what’s next after Sept 30, borrowers and banks will have to proactively engage each other to craft the most appropriate repayment programme to ease the financial and cash-flow burden.

“As we are slowly moving to stabilisation and recovery, financial assistance relief programmes are still very much needed, ” he said.

He added that the impact to banks earnings will be much significantly lower than the modification loss in the second quarter under the automatic loan moratorium.

Bank Negara said in a statement that it has been working closely with banks to ensure that assistance continues to be provided to borrowers affected by Covid-19.

“Businesses in almost all sectors have since resumed operations, and the vast majority of Malaysians have returned to work.

“With that, many borrowers who initially opted for the moratorium have started to resume loan repayments.

“Nonetheless, it is recognised that income and cash-flow challenges remain for some, especially those who have lost their jobs or experienced a reduction in incomes, ” it said, adding that a targeted approach ensured that financial resources and attention are prioritised where they are needed the most.

The central bank said it will monitor the progress of banks in assisting borrowers that may continue to face temporary financial difficulties.


Moratorium extension and targeted bank assistance a timely move

Jul 30, 2020

PETALING JAYA: Lauding the moratorium extension and targeted bank assistance as timely, businesses say more measures should be introduced to help businesses to stimulate the economy.

Federation of Malaysian Manufacturers (FMM) president Tan Sri Soh Thian Lai said the initiatives would provide a much-needed breather to affected individuals and businesses.

 

However, it also called for a moratorium to be extended to SMEs in need of additional financial relief.

“The process for the restructuring of loan repayments should be made simple and seamless allowing the industry to focus on rebuilding.

“SMEs have little negotiation clout with their bankers, so we hope the restructuring process could be facilitated well,” he said.

FMM has called on the government to offer restructuring of repayments for leasing of machinery, and provide a six-month moratorium on all of the government’s financing schemes under the Penjana initiative.

Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) SMEs committee chairman Koong Lin Loong said the initiative served its purpose in offering help to those who were affected.

“However, banks have to make it easier to require businesses to submit relevant documents,” he said.

SME Association president Datuk Michael Kang hoped there would be a mechanism for the banks to handle all the requests, as the loan moratorium was expected to benefit up to three million people.

“The banks would not be able to handle that amount of people. Maybe they could come up with a mechanism online to accept the individual’s requests,” he said.

The Malaysian Employers Federation (MEF) said that while the extension looks good on paper, it is troublesome in terms of administration and implementation.

Its executive director Datuk Shamsuddin Bardan said borrowers would have to take time off to go to the bank, which would have to cope with more customers.

It would be better to relook at the situation and extend the moratorium generally, he said.

“The issue of trying to prevent abuse should be at the back of the government’s mind. The borrowers will still have to pay back their loans one way or another,” he said.

National Chamber of Commerce and Industry of Malaysia (NCCIM) president Tan Sri Ter Leong Yap said the announcement on the loan moratorium would help eliminate uncertainty on the matter.

“The (announcement) is deemed crucial to support economic recovery as we emerge from the pandemic,” he said.

Research economist Mazlina Abdul Rahman said the moratorium will be helpful for some sectors particularly tourism-related.

“The Malaysian economy is slowly recovering as reflected in some of its macro indicators. Hence, this is a better option than to continue providing the moratorium on a blanket approach,” she said.

Office tenants' relocation plans put on hold, says Hap Seng Land

Jul 29, 2020
Office tenants' relocation plans put on hold, says Hap Seng Land
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KUALA LUMPUR: Office tenants have put their decision to relocate on the back burner for the time being, but the situation is unlikely to come to a standstill, Hap Seng Land Sdn Bhd said.

Director of property management Manfred Weber said there will come a time when a vaccine will be found and the Covid-19 pandemic will be behind us, even as the whole world is grappling with the situation today.

 
Weber was talking to five or six potential tenants pre-Covid-19 but things “slowed down” a bit when the pandemic hit.

Hap Seng Land is the property division of Hap Seng Consolidated Bhd and is involved in property development and investment. Other businesses within the Hap Seng group include plantations, credit financing, automotive, trading and building materials.

 
Weber was speaking to reporters a day after welcoming anchor tenant Tokio Marine Insurans (Malaysia) Bhd into Menara Hap Seng 3, its latest flagship office development located at the Jalan Sultan Ismail and Jalan P Ramlee intersection.

Tokio Marine took up 40% of the 200,000 sq ft office space net lettable area. A separate 43,000 sq ft is reserved for retail.

Collectively known as Plaza Hap Seng, it comprises three office blocks, namely Menara Hap Seng located at the former site of the MUI Plaza, Menara Hap Seng 2 and Menara Hap Seng 3. The first two office blocks are 98% occupied.

At a time when the Klang Valley is flooded with excessive office space and rising vacancy, Weber said they believed the quality of the building and its location are extremely important.

Banks could lose capacity to provide RM79b loans due to moratorium

Jul 28, 2020
Banks could lose capacity to provide RM79b loans due to moratorium
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KUALA LUMPUR: Banks could see a reduction in their capacity to disburse new loans worth RM79bil over the six-month moratorium period from April to September.

Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said over the moratorium period, total losses are expected to reach RM6.4bil.

 

This is equivalent to the reduction in the banks’ capacity to disburse new loans worth RM79bil whether to the people or to borrowers, he said.

''To ensure the people continue to be protected if the Movement Control Order (MCO) period is extended, the government will continue to monitor the situation and the latest developments, and will take the necessary action as has been done previously, ” he said at the Dewan Rakyat today.

''To ensure the people continue to be protected if the Movement Control Order (MCO) period is extended, the government will continue to monitor the situation and the latest developments, and will take the necessary action as has been done previously, ” he said at the Dewan Rakyat today.

Tengku Zafrul, who was responding to a question from Lim Guan Eng (DAP-Bagan) on whether the loan repayment moratorium would be extended by another six months, said the country’s banking system is estimated to incur lose RM1.06 billion under the Malaysian Financial Reporting Standards (MFRS) 9 for every month the moratorium is extended.

He said Malaysia was one of the first countries in the world to implement a loan repayment moratorium, and the first country to introduce a six-month moratorium.

Other countries that have introduced a moratorium include Singapore, Indonesia, the Philippines, Thailand, the United Kingdom, Canada, Italy and the United States.

In reply to a question from Tan Sri Noh Omar (PN-Tanjong Karang) on the positive impact of the moratorium, he said the value of the moratorium as of July 20 has hit RM59 billion while overall, the moratorium has benefited 7.7 million Malaysians, comprising 93 per cent of individual borrowers.

''I am confident the moratorium has to some extent helped the people face the challenging period due to COVID-19.

''In the ongoing discussions with Bank Negara Malaysia and the banking sector on their direction moving forward, they have given a commitment to continuing to help the people and businesses who need assistance in this challenging period, ” he said.

Tengku Zafrul said the results of the discussions will be announced soon. - Bernama

Change needed on how banks treat moratorium

Jul 28, 2020
Change needed on how banks treat moratorium
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KUALA LUMPUR: Affin Bank Bhd says there should be a change as to how banks treat loan moratorium, moving forward, as it seeks to reduce economic losses from the Covid-19 pandemic.

“The government and banks are talking to each other and we would like to see what (would) be the next step. We don’t want to call it a moratorium, as moratorium is expensive for everybody, ” group CEO Wan Razly Abdullah said at a press conference after its AGM.

 

“(But) it will be something like a moratorium, maybe a new word will come up from it. Hopefully it will not be moratorium, otherwise my shareholders will ask me how much I am losing again. We are looking at some sort of financial assistance programme, ” Wan Razly added.

He said the first moratorium cost the bank RM80mil day-one modification loss and if there is another round of similar moratorium, it would cost the bank another RM80mil.

“But everyone is trying to play their part to assist the Malaysian economy to a recovery. What we are trying to tell our customers is to reach out to us, maybe we can minimise the installment amount. We should work together on how we can manage this so that we can survive and recover from this crisis, ” he said.

Wan Razly said that during the moratorium period, the bank could not charge any interest for hire-purchase or personal financing loans.

“This is the agreement between the banks and Bank Negara as well, that we would have an interest-free period for these customers in this period. But for the other products, such as credit cards and mortgages, these will still be charged an interest. So what we do not charge an interest is basically a cost to the bank of RM80mil: we do not get this back, ” he said.

Wan Razly said this RM80mil would be deducted from its profit and loss statement and that the shareholders would have to bear the cost.

“The Covid-19 situation may require more than six months to recover. But somebody has to pay for this (moratorium) in the end, ” he said.

More than half of the bank’s loan books, or 63% of RM45bil, are under moratorium and its non-performing loans (NPLs) is at 3.11%, he said.

“We will get a better sense of NPLs once the moratorium ends in October. But we are doing our analysis behind the scenes (too), ” he said.

Wan Razly said economic confidence has picked up recently after the movement control order had been relaxed substantially from when it first began in March.

“We see houses being bought, cars being bought. People are spending (again) but we hope this can sustain itself and we want this to snowball to get better and better.

“But the missing piece is the lack of tourism and there is no overseas spend. Some of the hotels and restaurants are at sub-capacity levels, ” he said.

On whether dividends would be impacted eventually, he said the bank would know the impact by the end of the year.

“This would depend on the bank’s performance as it is based on profitability. The first half is not too badly impacted, (but) the second half will see some impact, ” he said.

Bitcoin rises above US$10,000 for first time since early June

Jul 27, 2020
Bitcoin rises above US$10,000 for first time since early June
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NEW YORK: After several weeks of trading in narrow ranges, bitcoin breached US$10,000 on Sunday for the first time since early June.

In addition to suffering pricing blows due to the economic fallout from the coronavirus outbreak, the virtual currency went through its third so-called halving on May 11, which cut the rewards given to those who ''mine'' bitcoin to 6.25 new coins from 12.5.

The ''halving'' has affected the supply side of bitcoin and increased the time needed for miners to find their break-even point.

On Sunday, the cryptocurrency hit highs of $10,200. - Reuters

 

 


Strong foreign interest in Malaysian bonds

Jul 27, 2020
Strong foreign interest in Malaysian bonds
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“From a macro point of view, bond flow is largely a function of risk sentiment. In a yield-starved environment, where the sovereign yields are negative in Japan and the eurozone, and sub -1% for US treasuries due to the massive quantitative easing (QE), the high yielding appeal of emerging Asian bonds, including Malaysia, should continue to attract inflows if the global risk sentiment remains conducive.

“Another point to consider is index-driven flows. Our view is for FTSE Russell to retain Malaysia in the World Government Bond Index (WGBI) at the annual review in September, ” he noted.

Currently, Malaysia remains under FTSE’s watch list for potential exclusion in the WGBI. However, Bank Negara’s measure to improve the onshore bond liquidity is seen as a positive move for its retention in the index.

In April last year, FTSE Russell said it would review the Malaysian government bonds’ participation in the WGBI due to market liquidity issues.

Another index to watch for, Phoon said, is the GBI-Emerging Market Global Diversified index, which has increased Malaysia’s weight in the past nine months. There could be additional inflows if Malaysia’s weight rises further, ” he added.

RAM Rating Services senior economist Woon Khai Jhek (pic below) said that with risk aversion towards emerging markets gradually subsiding while global investment sentiment improves, foreign net inflows for the second half may continue.

Increased global liquidity amid central banks’ QE measures would have also encouraged more foreign inflows. With the US Federal Reserve maintaining its dovish outlook, while also indicating that the policy rate would stay near zero through 2022, the prospects of prolonged low interest rate environment would spark more yield hunting among global investors, he said.

“This, in turn, will generate more inflow into the EM bonds such as Malaysia.That said, substantial risks remain given the uncertainty brought about by the Covid-19 pandemic, which may reverse the current trend of foreign inflows.

“Specifically, the risks of subsequent waves of infections globally could put foreign investors back on the sidelines as risk aversion prevails, ”Woon said.

Commenting on the possible risks, Malaysian Rating Corp Bhd (MARC) chief economist Nor Zahidi Alias (pic below) noted that a second wave of the pandemic could disrupt global growth recovery as global governments may be forced to renew their nationwide lockdowns.
“This would lead to fresh risk-off sentiment in global financial markets, causing foreign investors to flee towards safe-haven assets. In addition, the recent deterioration in US-China relations could also diminish the strength of global economic recovery efforts, ” he said.

As for bond yields, Zahidi said while there are fears of a second wave of the pandemic and a deterioration in global trade relations which may sap foreign demand for MGS, he does not foresee any potential significant yield spikes in MGS for the second half.

“Supportive fiscal and monetary policies employed in Malaysia would continue to encourage local holdings as witnessed in the first half of the year.

“Combined with the 25 basis points (bps) cut in the OPR to 1.75% on July 7, these domestic factors will keep a lid on yields. For the second half, we envisage the 10-year MGS yield to hover in the range of 2.6% to 2.85%, ” he noted.

On the outlook of the bond market, Phoon said there would likely be a strong year for the ringgit government bonds.

The total return for such bonds is 6.5% year-to-date. If the yield curve stays where it is, adding coupon accruals for the rest of the year, then the total return for 2020 can exceed 8%, a strong year considering the average return per year is usually 4%, he said.

“We expect a “dovish hold” by Bank Negara in September. But if the central bank cuts rate by another 25bps, the total return this year could match that of 2019 (9.1%) for government bonds, ” Phoon said.

Meanwhile, Woon noted that the rating agency projects a higher MGS/GII issuance of RM155bil-RM165bil this year compared with RM115.7bil last year. This is due to the wider budget deficit from increased development expenditure following the stimulus packages announced by the government.

RAM projects corporate bond issuance for 2020 to come in at RM80bil-RM95bil, a deceleration from the RM132.8bil the previous year.

The dimmer issuance outlook is primarily due to the widely expected economic contraction and potential project delays as well as reduced capital expenditure by companies this year.

SMEs' economy to grow 4.5pct in 2021, 5.8pct in 2022: Bank Islam

Jul 24, 2020
SMEs' economy to grow 4.5pct in 2021, 5.8pct in 2022: Bank Islam
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KUALA LUMPUR: Bank Islam Malaysia Bhd expects sthe small and medium enterprises' (SMEs) gross domestic product (GDP) to grow 4.5 per cent next year.

The post-Movement Control Order (MCO) environment would present huge opportunities to the SMEs as long as they remain competitive, said Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid.

Afzanizam said in the past, SME GDP growth had tended to accelerate much faster than the overall economy by a factor of 1.09 compared to the GDP of the country.

He said while Bank Islam projected the GDP to grow 3.5 per cent next year, the SME industry would grow higher at 4.5 per cent in 2021 and 5.8 per cent in 2022 (compared to the 4.7 per cent projection of GDP growth).

He said one of the important indicators of recovery in the economy was the data from Malaysia's Industrial Production Index (IPI), which had increased by 18.2 per cent month-on-month in May from 30.5 per cent fall in the previous month.

''In light of close correlation with Malaysian economy, the SME GDP is expected to decline by-1.0 per cent in 2020 (Malaysia: -1.5 per cent) before rebounding to 4.5 per cent (Malaysia: 3.5 per cent) in 2021 and 5.8 per cent (Malaysia: 4.7 per cent) in 2022.

''SME GDP tend to accelerate much faster than the overall economy by a factor of 1.09. With the right policy in place, a swift recovery can be expected,'' he said.

Besides that, he said this would also be supported by increase in household income, of which in average had grown 5.2 per cent since 22 years ago for all groups.

''This data is important for the SMEs where it signifies the increasing purchasing power of Malaysians. Consumers continue to demand quality products and services. Therefore, value proposition is the critical success factor for business survival.

''The backdrop for SMEs to thrive is there and the Malaysian economy presents a huge potential for them to thrive,'' he said during Bank Islam's ''Webinar 2020: SMEs post-MCO surviving the shifting landscape'' today.

Bank Islam SME advisor Datuk Dr Hafsah Hashim said in order for SMEs to remain competitive post-MCO, one of the important thing for them was an understanding of which innovations, if adopted permanently, might provide substantial uplift to economic and social welfare— and which would ultimately inhibit the broader betterment of society, even if helpful in halting or limiting the spread of the virus.

She said for example, SMEs could leverage on technology such as Artificial Intelligence (AI) and Big Data into their business model.

''For AI, I am suggesting for the SMEs to start small. Start by integrating first-party apps that facilitates productivity of the already employed workforce.

''They can also steer efforts towards open-sourced AI, cloud systems and flexible workflow models and start with a small problem with a high chance of demonstrating a positive return on investment,'' Hafsah added.

BioAlpha surges with record 2.2b shares done

Jul 24, 2020
BioAlpha surges with record 2.2b shares done
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KUALA LUMPUR: Integrated health supplement company BioAlpha Holdings Bhd's share price and warrants surged in very heavy trade on Thursday after it secured a RM2.1bil health food contract.

At 5pm, it was up 13 sen to 31 sen with a record 2.2 billion shares done, which was double its issued shares of 1.04 billion units.

 

At 31 sen, it is trading at a price-to-earnings of 34.44 times.

Its warrants surged more than the shares, climbing 18.5 sen to 25.5 sen with 693.50 million shares.

The shares and warrants totalled 2.89 billion units traded and accounted for 23.83% of the total trading volume of 12.12 billion shares. This was the second highest volume on Bursa Malaysia since the 12.29 billion shares done on July 20.

The integrated health supplement company had secured the contract to supply health food to the public and private sectors in China over five years.

Bioalpha said its wholly owned Bioalpha (HK) Ltd had entered into a partnership agreement with two Chinese partners, Guizhou Yuhexin Trading Ltd and Hainan Shifengfu Co Ltd. Bioalpha HK also entered into a supply contract agreement with Guizhou Yuhexin.

CGS-CIMB Equities Research said Bioalpha will mainly source the required raw materials in China, based on a determined formulation. These products will be supplied directly to GHYX, which will conduct further processing (if necessary) and packaging activities.

For the annual contract value of RM426.7mil, it said Bioalpha will supply up to 100 SKUs of active ingredients and formulations.

“We understand that the effective GP margins for this contract for Bioalpha will be in the region of 2-3%, given the nature of the job.

''“We raise our FY20-22F EPS by 86-168% to account for this agreement, which was announced today. In our assumption, we input a flat annual contract value of RM426.7m for the forecast period, with an unchanged GP margin of 2.75%.

“We also input a larger share base of 1.04bn to account for the recently completed 10% private placement.

“We upgrade Bioalpha to an Add from a Hold, with a higher TP of RM0.24 (on a fully-diluted basis). This is based on a higher P/E of 15 times CY21F P/E, at a 40% discount (50% previously) to our consumer sector target CY21F P/E of 25 times.

“Note that, the discount is to account for its smaller market cap and higher earnings volatility, ” CGS-CIMB Research said.

 

 

 


MyCreative to leverage on PENJANA to revive creative sector

Jul 23, 2020
MyCreative to leverage on PENJANA to revive creative sector
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MyCreative applauds the allocation of RM225 million in overall value for the arts, culture, entertainment and event industries under the National Economic Recovery Plan (PENJANA) announced recently on June 5.

Applications are now open for grants, matching investments and loans under MyCreative’s own programmes to provide effective implementation of the stimulus measures for the Creative Industries.

According to Saifuddin Abdullah, Minister of Communications and Multimedia, the ministry is committed to support the Creative Industry. The allocation under PENJANA will address the immediate needs of all within the industry, providing much-needed boost to a broad aspect of the creative economy. There is also an emphasis on digitalisation, growth and sustainability of the creative activities. Moreover, it will also complement the ministry’s initiatives for the Creative Industry for the next six months.

“Our immediate focus will be on ensuring that every cent reaches the right hands as soon as possible with proper governance and integrity. l am confident that MyCreative and Unit Pelaksanaan Dan Koordinasi Stimulus Ekonomi Antara Agensi Nasional (LAKSANA) will ensure effective implementation and inclusivity, including women, young people and minorities, while exemplifying the advice of the Prime Minister in ensuring we do not allow red tape and bureaucracy to hinder Malaysia’s economic recovery,” Saifuddin said.

On a similar note, the Finance Minister, Tengku Datuk Seri Zafrul Tengku Abdul Aziz said the allocation affirms the Government’s support for the creative economy, especially during these difficult times that creative activities have been impacted due to the Covid-19 pandemic.

For the six-month period from July to December 2020, MyCreative will focus on assisting creative businesses and activities transition to or incorporate more effectively digital and online opportunities.

“We are grateful to the Minister of Communications and Multimedia and the Finance Minister for entrusting MyCreative with the task of jumpstarting the Creative Economy and putting it back on its trajectory of becoming a significant contributor to Malaysia’s growing digital economy and its GDP”, said Mohd Naguib Razak, Chairman of MyCreative Ventures.

The Chairman also said the substantial allocation of RM190 million in overall value for the creative sector under MyCreative is evidence of their shared belief in the value and potential of their Creative Industries.

“MyCreative acknowledges the responsibility that comes with the mandate to carry out these measures in the most efficient yet urgent manner and is committed to applying our know-how to add value, help to future-proof the creative industry and make its voice heard,” he added.

The MyCreative programmes cover 10 creative sub-sectors: Content Creation (including Film, Broadcast & Streaming Content and Videogames), Music, Fashion, Performing Arts, Visual Arts, Literature, Traditional and Cultural Arts, Culinary Arts, Design and Creative Education.

Applicants can tap into a variety of schemes and initiatives such as Live Event Grants, Digital Marketing Grants, Matching Investments Schemes as well as very attractive Fast Track, Low- Interest Soft Loans.

These measures will be further complemented and enhanced by MyCreative’s Creative Industry Digital Velocity Programme comprising digital marketing and promotion training, connectivity assistance and advisory services.

MyCreative’s overall role is to help businesses make the difficult transition to becoming more digital in order to remain relevant and competitive in the ‘new normal’. Special attention will be given to Live Events and Exhibition Showcase Events, especially if they are able to incorporate a digital or online dimension into their business model.

In addition to direct financial support to creative businesses, MyCreative is also looking to provide indirect support under the Creative Industry Digital Velocity Programme, in the form of advice, training and networking in order that creative industry practitioners can better incorporate a digital or online dimension to their creative business or activity and to use the Digital Marketing and Promotions Grants more effectively.

MyCreative have also arranged collaboration with the private sector, beginning with partnerships with Google, Facebook and Yes, to help players adapt to new normal through training in digital distribution methods and promotion, development of new business models and connectivity.

Recovery of transportation & logistics sector varies among different segments

Jul 23, 2020
Recovery of transportation & logistics sector varies among different segments
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KUALA LUMPUR: The speed and path of recovery will vary among the different segments in the transportation and logistics sector, said AmInvestment Bank Bhd.

AmInvestment pointed that the sector was recovering with the reopening of the economy both locally and globally.

''The recovery of global trade augurs well for the port segment. However, the air travel industry faces a bumpy path given the uncertainties surrounding the opening of borders and recapitalisation plans of airlines.

''While the logistics segment is technically a beneficiary of the pandemic (particularly, parcel delivery on the back of the booming online shopping), it is weighed down by a crowded playing field with cut-throat competition,'' it said in a report today.

AmInvestment, which kept its ''underweight'' call on the sector, said the global economic recovery would translate into more robust global trade, and hence higher throughput at the seaports.

Over the longer term, the outlook for ports in the region including Malaysia remains resilient. This will be underpinned by rising investment in the manufacturing sector that generates tremendous inbound (feedstock) and outbound (finished product) throughput for ports.

AmInvestment expects project container throughput at Westports Holdings Bhd and the ports of MMC Corp Bhd to bounce back by 10 per cent and eight per cent respectively in financial year 2021 (FY21) and return to the pre-pandemic levels in FY22.

The firm said there had been green shoots of recovery in the air travel industry, as indicated in the increase in global daily commercial flights since April 2020 as tracked by real-time flight tracker on the back of the easing in travel restrictions globally.

However, the flights were still at only about 40 per cent as at end of June this year of the level registered at the same time last year.

The firm expects passenger volume for AirAsia Group Bhd to rebound by 35 per cent in FY21 after shrinking by 50 per cent in 2020.

This is in line with the Malaysian Aviation Commission's projection of 49–50 per cent contraction in Malaysia's air traffic passengers in FY20.

On the logistic sector, AmInvestment believes the parcel delivery segment was a winner of the current situation as the pandemic and the resultant social distancing had accelerated the change in shopping habits of consumers from physical to online channels.

However, it said the sector had low entry barriers.

A crowded playing field, with 111 players as at June this year, has given rise to cut-throat competition resulting in severe squeeze in margins.

''We believe the overcrowded situation could get worse in the short to medium term given more new entrants funded by venture capitalists who want to jump on the bandwagon of the e-commerce boom.

AmInvestment's top pick within the sector is MMC Corp.

''We see MMC Corp as a recovery play given the expected improvement in its port throughput over the next six to 12 months as economies reopen.

''We see value in MMC Corp with its port business being valued at 12 times forward price per earning on a stand-alone basis,'' it added.

Bank Negara foreign reserves rise to US$104bil as at July 15

Jul 23, 2020
Bank Negara foreign reserves rise to US$104bil as at July 15
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KUALA LUMPUR: Bank Negara's international reserves rose US$600mil to US$104bil as at July 15 from two weeks earlier

 
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In a statement today, the central bank said the reserves position was sufficient to finance 8.5 months of retained imports and was 1.1 times the total short-term external debt.

The main components of the international reserves comprised foreign currency reserves (US$95.7bil), International Monetary Fund reserves position (US$1.3bil), Special Drawing Rights (SDRs) (US$1.1bil), gold (US$2.2bil) and other reserve assets (US$3.7bil).

CIMB Thai's H1 net profit rises 115pct

Jul 22, 2020
CIMB Thai president and chief executive officer Adisorn Sermchaiwong said the increase in operating income was mainly due to an increase in gains on financial instruments measured at fair value through profit or loss of 667.8 million baht and a net interest income growth of one per cent or 58.6 million baht.

The latter was driven by higher interest income on hire purchase loans.

Adisorn said net interest margin over earning assets stood at 3.3 per cent during the same period, compared to 3.5 per cent recorded last year, resulting from lower interest income on investments.

As at June 30 this year, he said total gross loans, inclusive of loans guaranteed by other banks and loans to financial institutions, stood at 241.3 billion baht, a decrease of 0.3 per cent from December 31, 2019.

''Deposits (inclusive of bills of exchange, debentures and selected structured deposit products) stood at 265.3 billion baht, an increase of 9.9 per cent from 241.5 billion baht as at end of December 2019.

''The modified loan to deposit ratio decreased to 91.0 per cent ,compared to 100.3 per cent as at December 31 2019,'' he said.

Meanwhile, CIMB Thai's gross non-performing loans (NPL) stood at 13.9 billion baht, translating to an impaired loan ratio of 5.8 per cent compared to 4.7 per cent as at December 31, 2019, due to the change in the NPL classification criteria.

''CIMB Thai continues to exercise high credit risk underwriting standards and risk management policies. The bank also focuses on improving productivity and monitoring collection,'' said Adisorn.

CIMB Thai Group's loan loss coverage ratio decreased to 83.7 per cent as at June 30, from 99.0 per cent at the end of December 2019.

As at June 30, its total allowance for expected credit losses stood at 11 billion baht, translating to a 2.6 billion baht excess over the Bank of Thailand's reserve requirements.

The bank's total consolidated capital funds as at June 30 stood at 51.2 billion baht.

Pharmaniaga to expand manufacturing, presence in Indonesia

Jul 22, 2020
Pharmaniaga to expand manufacturing, presence in Indonesia
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KUALA LUMPUR: Pharmaniaga Bhd plans to expand its manufacturing busines and also expand its presence in international markets, especially Indonesia, says its acting managing director Mohamed Iqbal Abdul Rahman.

In a statement issued aftet its AGM on Tuesday, he said many of its shareholders were keen to find out more about its Halal vaccine project, which includes the Covid-19 fill and finish.

 

“We will be making a separate announcement on this matter once we have firmed up the relevant details.

“Moving forward, we are projecting improved results in the coming years, particularly given the fact that we were able to complete the accelerated amortisation of PhIS in 2019, ” he added.

Mohamed Iqbal said in managing the impact of the Covid-19 pandemic, the group had adapted to the new normal and have improved its standard operating procedures.

He said these measures were to ensure the safety of its human capital as well as the continuity of its business operations.

“While there are undoubtedly challenges ahead for the group, we are confident in our ability to capitalise on viable opportunities in the healthcare sector to achieve sustainable growth over the long-term and enhance value for our shareholders, ” he added.

Meanwhile, Pharmaniaga chairman Datuk Dr Hafsah Hashim said the board was able to have interacted with so many of its shareholders virtually, in keeping with its commitment to adapt to the new normal and observe Covid-19 preventive measures, to ensure the health and safety of our shareholders.

He added the interactive session saw all resolutions being passed.

 

 

 


Bursa Malaysia explains reason behind trading glitch

Jul 21, 2020
Bursa Malaysia explains reason behind trading glitch
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KUALA LUMPUR: It was a unique set of circumstances, something that Bursa Malaysia had not experienced before, which caused the differences in the interrupted trading patterns last Thursday and Friday.

The differing stock prices on Bursa Malaysia’s website and on trading platforms on Friday came after an outage at the exchange at 3.30pm on Thursday. Trading only resumed on Friday at 9am.

 

Without elaborating on the technical issues, Bursa Malaysia chief executive officer Datuk Muhamad Umar Swift said the problem has since been rectified. “Firstly, we apologise to all participants of the exchange and to the stakeholders.

“More importantly, it’s making us rethink and re-evaluate all our core systems to ensure it doesn’t happen again, ” he told a press conference here after the Invest Malaysia 2020 –Virtual Series 2 session.

 

“You would have seen some suggestions that it was ransomware attacks or some cyber attacks. That’s not the case. It was just a unique server circumstance. It was purely technical, ” he said.

Umar also said that the re-emergence of retail investors in the market is a positive sign, as the exchange has been working hard to bring retailers back.

Banks will not extend moratorium

Jul 21, 2020
Banks will not extend moratorium
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PETALING JAYA: Borrowers will need to start repaying their loans from October onwards as the banks will not extend the automatic loan moratorium, banking sources said.

However, an industry source said while the blanket moratorium would end, banks are open to assist borrowers to restructure and reschedule their loans in a more targeted manner.

 

“It is estimated that there will be three million borrowers who will take that offer up, ” the source told StarBiz.

Earlier, Bank Negara was quoted as saying that the banks stood ready to assist borrowers in a more targeted manner and have reached out to borrowers to offer various forms of repayment assistance including payment of interest only, lengthening of loan tenure and flexible repayments.

Sources said that among the reasons for a no automatic and blanket moratorium was because the banks wanted borrowers to approach financial institutions to renegotiate their loans.

“The banks will have until the middle of next year to restructure and reschedule their loans, ” a source said.

The six-month moratorium, announced by Prime Minister Tan Sri Muhyiddin Yassin in late March, ends on Sept 30.

The loan moratorium period is a duration a borrower is not obligated to make monthly debt repayments to the banks.

It was initiated to relieve the burden of those directly affected by the impact of the pandemic. It was also designed to keep cash with households, given the uncertainty at the start of the Covid-19 pandemic.

The loan moratorium was a feature from the first relief package during the movement control order by the government that saw business and consumer activity basically grind to a halt, except for essential services.

However, with the rate of unemployment creeping up and some sectors are still in standstill due to the Covid-19 fallout, some quarters are concerned over borrowers’ debt repayment capability and have pushed the government to extend the loan moratorium for another six months until March next year.

The unemployment rate crept up to 5.3% in May from 5% in April. Last year, the unemployment rate averaged just slightly over 3%.

MIDF Research head of research Imran Yassin Md Yusof (pic below) expects banks to see higher non-performing loans (NPLs) post the loan moratorium as troubled borrowers may not be able to start servicing loans when the grace period ends.

“Nevertheless, we expect the banks would have identified potential troubled borrowers and would have put a lot of effort in restructuring and rescheduling these potential troubled loans and this may moderate the level of NPLs, ” he told StarBiz.

The central bank had earlier acknowledged that the NPLs would “naturally” rise post-moratorium.

“What is more important is the ability of banks to absorb the impact, ” Bank Negara was quoted as saying in response to the potential impact on banks as the loan moratorium expires in September.

The central bank emphasised that the banks’ asset quality of overall loans was sound, given the prudent underwriting standards and risk management practices that have strengthened over the years.

In addition, adequate capital and liquidity buffers built up over the years are expected to help banks manage these current challenges.

“Borrowers are encouraged to approach their banks early to discuss suitable repayment plans based on their financial circumstances.

“Borrowers can also approach the Credit Counselling and Debt Management Agency and Small Debt Resolution Scheme, ” it added.

Commenting on the six-month loan moratorium that took effect in April, Bank Negara said the measure had provided a massive cash flow relief to businesses and households.

It has helped households and businesses to weather through the lockdown period at the peak of the pandemic, which could have otherwise caused defaults and “financial scarring” to even the viable borrowers.

The central bank said the focus moving forward is for banks to provide more targeted assistance to households and businesses based on their financial circumstances and challenges.

“This is also important to ensure that banks are able to support new lending activities as the economy starts to recover from the impact of the pandemic, ” it said.

Earlier this month, Bank Negara cut its overnight policy rate for the fourth time this year by 25 basis points to 1.75%.

This was part of the central bank’s initiative to accelerate Malaysia’s economic recovery through cheaper borrowing costs.

 

 

 


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