This article first appeared in The Edge Malaysia Weekly on July 29, 2019 - August 4, 2019

THE AmBank group has recently come under the media glare, as former staff testify in the ongoing trial of former prime minister Datuk Seri Najib Tun Razak in relation to misappropriation of funds at SRC International Sdn Bhd. The ex-premier had an AmBank account.

Group CEO Datuk Sulaiman Mohd Tahir, however, shrugs it off, saying it has been business as usual at the bank.

He points out that ever since AmBank was slapped with an unprecedented fine of RM53.7 million by Bank Negara Malaysia on  Nov 23, 2015 — coincidentally his first day on the job — it has significantly improved its internal systems and processes to ensure there is no repeat of non-compliance issues.

“We are an open book. In fact, my fees to PIDB (Perbadanan Insurans Deposit Bhd) have come down, a reflection of our improved risk profile,” he says in a two-hour interview with The Edge.

Below are excerpts from the interview.

The Edge: Datuk, the court case has brought renewed scrutiny on AmBank. Has it been bad for business in any way?

Sulaiman: It has not impacted our business. As everyone knows, we were the only financial institution (FI) fined for breach of regulations in terms of non-compliance. RM53.7 million was the largest fine ever imposed on any FI in Malaysia. Much has been done to improve and enhance our processes and internal systems to ensure that we will not have a repeat of non-compliance. In addition, AmBank agreed with Bank Negara to commence a four-year programme during which we have set aside RM25 million per annum for investment in systems, infrastructure and training. This series of measures will enhance the robustness of our processes and is intended to ensure that such circumstances will not happen again in the future.

What is AMMB’s strategy for moving forward as a mid-sized bank? You’ve mentioned that partnership opportunities will become more important.

AmBank is looking to grow our reach by expanding our partnership footprint. Forging partnerships with other industry players will give us accelerated access to new markets and customers. It will also improve our competitive positioning as we will be able to provide a better and more integrated value proposition for end consumers. At the same time, we will be able to achieve synergistic cost efficiencies through scale. Our current partners include Tencent, WeChat, Digi, Maxis, Merchantrade, Boost and PayNet.

Are there more retail non-performing loan (NPL) sales on the cards?

The NPLs that we sold earlier this year were old debts, more than 10, 20 years old. As we’ve started now to grow the books, who’s to know? Maybe in the next 5 to 10 years, we’ll do another round. It makes sense to sell only when it’s more than 10 years, by which time you’ve probably exhausted every option [to recover them]. When you sell to a specialist, they have a different way of doing things.

There were rumours a while back of a plan to have Affin Bank merge with AmBank.

Affin? (Laughs) I mean, we always look at opportunities if it makes sense. But if you have too much duplicate business and you merge, by shedding costs … I don’t think it’s the right environment to do layoffs. So the question of us and Affin — what do we get out of it, assuming we merge?

Do you plan to cut branches? Is there likely to be a fresh round of mutual separation scheme (MSS)?

I don’t think so. In the last MSS, we shed 1,200 people. We’re currently looking at our back-end machinery to see if there are duplications of roles. But whether that leads to MSS, I don’t think so. It’s probably more of a redeployment in terms of roles. As for branches, we have 171 now. It will remain at about that number, at least for the next one to two years.

Are there plans to divest any non-core businesses?

It’s fair to say that funds management and insurance are two businesses that we’re reviewing. We don’t have to be in those businesses, but we’ll remain distributors, as per the trend among banks. That said, it’s not easy to just let go of those businesses … there’s price to consider and also regulators to manage. So, it’s a process we will go through. There’s no hurry … these are good businesses, and they give me good income.

So are you currently in talks to sell AmMetLife or any of those companies?

There will always be talks. Is it something that will get done this year? I don’t know. If I have something on the table, I will make the necessary announcement.

How are AmBank’s digital plans going? How relevant is your digital spend for the SME segment?

We have invested about RM100 million since we embarked on our digital transformation journey. We aim to invest an additional RM150 million over the next two years to ramp up the digitalisation of our financial services. Digital transformation for SME includes the launch of our AmAccess Biz digital banking platform, which will provide a single access point for SMEs to access banking services online or via the mobile application. We are looking at reducing turnaround time by half, from 5.5 days currently to 2.5 days. We are also looking at building a digital process to eventually provide loan approvals to SMEs within 24 hours.

What is your outlook for the banking sector for the rest of the year?

We are seeing growth in some industries in Malaysia. While 2019 will be a challenging year as a result of external headwinds and domestic challenges, we expect the Malaysian economy to maintain a credible growth of around 4.5% from 4.7%, supported by private spending and investment. The revival of mega projects, the recent rate cut by Bank Negara and the Goods and Services Tax as well as income tax refunds should provide a further boost to our economy.

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