KUALA LUMPUR (July 16): Thrift and loan co-operative Koperasi Angkatan Tentera Malaysia Bhd (KAT) has not abandoned its plan to become a full-fledged Islamic cooperative bank, which it has been pursuing since 2002.

"We are now behaving more like a financial institution. We also have in place a core banking system," KAT chairman Datuk Zulkiflee Mazlan told reporters, after a 30-minute meeting with the Council of Eminent Persons (CEP) at Menara Ilham today.

In September 2015, chief executive officer Datuk Ahmad Zahudi Salleh had told The Edge Financial Daily that KAT, which has a financing asset of RM2.97 billion as at end-2017, aimed to be the third cooperative bank after Bank Kerjasama Rakyat Malaysia Bhd (Bank Rakyat) and Koperasi Bank Persatuan Malaysia Bhd (Bank Persatuan).

In its preparation to morph into a full-fledged Islamic cooperative bank, Zulkiflee said KAT had roped-in and employed around 80 bankers to transform the cooperative entity in its move to become a bank. 

"Our plan is still on the move, and we await the higher authority to make a decision on this," he added. 

Zulkiflee said KAT is armed with sufficient liquidity to become a full-fledged cooperative bank with a focus on army personnel, which is expected to be within the context of development financial institution.

As of today, Zulkiflee said KAT has shareholders' funds in excess of RM2.3 billion, which is higher than Bank Negara Malaysia (BNM)'s minimum capital requirement of RM100 million. 

He said the final nod for KAT to become a bank will come from the Malaysian Co-operative Commission (SKM), which will also include an indirect green light from Bank Negara Malaysia (BNM). 

"We think we are ready to become a bank. But at the end of the day, we are only ready to be a bank, if the regulators say so," he added. 

When asked whether the authorities will issue a decision for KAT to become a bank before year-end, Zulkiflee said: "I'm not sure".

Separately, two representatives from SKM, who also met with the CEP, declined to comment on KAT's dream of becoming a bank.  

For now, Zulkiflee said KAT would not want to meet with the new BNM Governor Datuk Nor Shamsiah Yunus to discuss on the possibility of accelerating the process to become a bank. 

When quizzed on the hindering factors that have been delaying KAT's approval to become a bank, Zulkiflee said: "When you talk about becoming a bank, the question in their mind would be, are we fully prepared to become one?"

In addition, Zulkiflee said the two regulators, SKM and BNM, will naturally voice their concern on whether KAT will live to become a successful bank. 

"We embrace the regulator's concern," he added. 

As to whether the market, which is flushed with 27 commercial local and foreign banks, can absorb a new entry player, Zulkiflee said, "yes".

"There are many other areas that is undertapped and we see great opportunities in this segment," he added. 

Meanwhile, when met after the CEP adjourned its meeting for today, former Bank Negara Malaysia (BNM) governor Tan Sri Dr Zeti Akhtar Aziz refused to comment on whether there is a room for a new bank with the 31 million population. 

"The cooperatives need to have a role supporting the economy, including higher value added activity," she added. 

At present, Zulkiflee said KAT's system is fully compliant of the guidelines issued by the BNM.  

"While we believe that our system is 100% in line with the guidelines, we have also engaged an external due diligence firm to double check on whether we have missed out on any areas," he added.

This year, Zulkiflee said KAT is hoping to maintain its dividend payout of 10%, amid intense market competition and tighter lending rules.

"We hope to give out more dividends to our shareholders, but we remain prudent and cautious of the challenging operating environment," he said, noting KAT has been consistently paying a 10% dividend to its members.

In financial year ended Dec 31, 2017 (FY17), KAT posted a pre-tax profit of RM204.7 million, on gross revenue of RM320.03 million.