KUALA LUMPUR (Oct 15): Bank Simpanan Nasional Sdn Bhd (BSN) expects 2016 to be a "very challenging" year for the banking industry, as lenders compete for a bigger share of the retail lending market.

"At this point in time, we see the outlook for 2016 to be even more challenging than this year. So we have to tread carefully. We can expand, but if we do so too aggressively, we are also looking at higher chances of having loans going into default," BSN’s deputy chief executive of corporate support, Siew Kin Meng, told a press conference at BSN's brand launch here today.

"The retail banking industry is very competitive. We (BSN) are in the retail banking market, but many commercial banks are also coming into this market. Basically, everyone is fighting for a smaller pie," Siew added.

Deputy chief executive of retail banking Datuk Yunos Abdul Ghani said BSN would focus on housing loans and hire purchase schemes.

"We are still focusing on our core business, but we are also doing some refinement and tweaking to these products (housing loans and hire purchase schemes), to make them more relevant. We do not plan to introduce any new products that are drastically different for now," said Siew.

BSN also plans to increase the loan sum of its micro financing product to slightly more than RM50,000, and make it more relevant to customers. Currently, the cap on micro financing is RM50,000.

The bulk, or 65% to 66%, of BSN’s financing portfolio is Islamic, while the rest is conventional, he said.

BSN, whose strength lies mainly in rural areas and has a wide network of 6,157 banking agents and 401 branches, is keen to get into digital banking to serve GenY customers.

"We are definitely looking at digital banking. We are actually in the process of upgrading our bandwidth, Last time, what we have is minimal bandwidth to do our processing. But we also have to be very careful that we don't neglect our rural customers. If you open a digital branch and they don't see people, they will be uncomfortable. So we need a fine balancing act, and customise this digital banking to location," Siew explained.

BSN is also targeting urban areas to serve the lower income group that stay in People’s Housing Project Projects, or PPR, he said.

Meanwhile, BSN’s new logo, which comes 40 years since it began operations, saw the deep blue corporate colour changed to teal to look more appealing and friendly. Its signature "pohon pitis" now has 14 coins, representing 13 states and the Federal Territories.

Siew said BSN would spend more than RM130 million on the rebranding exercise, with the majority of the cost going toward signages and renovation of branches.

"The cost will spread over a period of three years, because we expect [that] it will be done in stages. As these are all capital expenditure, it will be amortised over another period of five years, so the hit on (profit and loss) would be quite minimal."

BSN's chief executive, Datuk Adinan Maning, said the rebranding would also mean improved services.