This article first appeared in The Edge Financial Daily on August 1, 2019

KUALA LUMPUR: To keep abreast of rivals in digital banking, AMMB Holdings Bhd (AmBank Group) has been ramping up investments and initiatives, with plans to set aside almost RM100 million in capital expenditure (capex) for its digital agenda annually.

A few “digital enablers” would be launched this year, said AmBank Group chief executive officer Datuk Sulaiman Mohd Tahir, pointing to “Pay as you Grow” and “eFlex@AmOnline” as two such pilot roll-outs drawing a “very positive” response.

“Pay as you Grow” allows the bank’s credit card terminal merchants to apply for a quick loan with minimal documentation, based on their average monthly credit card collections.

“eFlex@AmOnline”, the bank’s offering in the deposits space, combines the best of fixed deposit (FD) and savings, and is unique in that it combines an FD-like yield with savings account liquidity, said Sulaiman.

AmBank customers with a loan or a credit card, but not a bank account, can open this account entirely online.

Under the investment in digital initiatives, the bank has also been forming new strategic partnerships with industry players such as PayNet, WeChat, Digi and Axiata to diversify its e-payment offerings. Last year, it spent over RM70 million in capex for digital enhancements.

Sulaiman said AmBank remains cautious of the overall banking industry given the prolonged US-China trade conflict, as well as ongoing government restructuring.

“I think [having a] cautious view is certainly right. But ... it has been a positive start for us,” he told reporters at a press conference after its annual general meeting and extraordinary general meeting here yesterday.

Earlier this month, the World Bank lowered Malaysia’s gross domestic product growth forecast for the year to 4.6% to reflect unresolved trade tensions, a sharper-than-expected slowdown in larger economies and market volatility, which it said will risk growth in the near term.

However, AmBank would still maintain its loan target growth for the financial year ending March 31, 2020 (FY20), Sulaiman said.

On AmBank’s proposed loans of RM20 billion to small and medium enterprises (SMEs) over three years, he said the bank expects a net interest margin of 2.5% from the disbursements amid the current overnight policy rate of 3%, and provided its non-performing loans could be kept under control.

In April, the bank set a target to disburse RM20 billion in loans over three years to spur SME development in Malaysia. Last year, it disbursed RM6.14 billion of such loans.