KUALA LUMPUR (Feb 24): Malaysia’s top lender Malayan Banking Bhd (Maybank) will continue to lend to the oil and gas (O&G) industry as part of its role to help grow the economy, together with the support of shareholders of the borrowers who manage the associated business risks.
Speaking at Maybank’s results briefing on Thursday (Feb 24), its group president and chief executive officer (CEO) Datuk Seri Abdul Farid Alias said the banking sector will continue to support the industry “as long as that dynamic [relationship] exists” between lenders and shareholders of the companies.
He was commenting on a question citing a news report on ailing O&G services provider Sapura Energy Bhd, which needs to seek another financial lifeline or risk dragging down hundreds of its vendors the debt-laden company owed.
“The role of banking in growing the economy is done in tandem with other stakeholders that exist within the ecosystem, the most important one being shareholders of the company [that borrows]," said Abdul Farid.
“It also [factors in] the regulators, the market competitors, and the demand and supply outlook.
“Our role as a bank has always been to assess credit risks — not business risks — and play our role in supporting the funding of our customers through assuming the credit risks whereas the shareholders will assume the business risks itself,” he said.
“In this symbiotic relationship, banks in general, and Maybank specifically, have gone through the cycle in making sure we play our role to support all the customers depending on the market circumstances.
“But it's with the support of the other stakeholders, especially the shareholders. We always work on that basis. For as long as that dynamic [relationship] exists, then we will continue to support," he added.
“At any point when that symbiotic relationship breaks down, that’s when we see NPL and other numbers [come about].
“We will continue to support, for sure, because our role after looking after our depositors' savings is helping to grow the economy by helping specific customers,” he said.
Sapura Energy's subsidiaries have received multiple winding-up petitions this month, amounting to over RM50 million, having missed payment schedules from as early as 2020.
From a company controlled by its former president and group CEO Tan Sri Shahril Shamsuddin, Sapura Energy saw Permodalan Nasional Bhd emerge as a controlling shareholder with a 40% stake after injecting RM2.67 billion following a cash call that concluded in 2019.
In early 2021, Sapura Energy completed a RM10.3 billion refinancing with 13 lenders including Maybank Islamic, CIMB, RHB Islamic, and AmBank, and secured a working capital facility worth RM1.2 billion, which it has exhausted.
Despite a moratorium on principal repayment lasting until mid-2023 and higher oil prices, Sapura Energy remained in the red since 2021, reporting a massive RM2.3 billion net loss in the nine-month period ended Oct 31, 2021 with finance costs exceeding net cash from operating activities.