Banks appear eager to provide SME loans as economy recovers — CIMB Bank

CIMB Bank Bhd deputy chief executive officer of group commercial banking Ahmad Shazli Kamarulzaman (Photo by Shahrin Yahya/The Edge)

CIMB Bank Bhd deputy chief executive officer of group commercial banking Ahmad Shazli Kamarulzaman (Photo by Shahrin Yahya/The Edge)

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KUALA LUMPUR (Sept 26): Banks appear to be eager to provide financing to small and medium enterprises (SMEs) as economic recovery offers better clarity for their risk profile, said Ahmad Shazli Kamarulzaman, CIMB Bank Bhd's deputy chief executive officer of group commercial banking.

"Maybe in the past, during the pandemic time, there was a little bit less [clarity] in terms of [whether] companies [would] come out of the pandemic or not.

"But now with the recovery, banks have better line of sight, in terms of how companies, industry and sectors will do. I am very optimistic there will be a lot more activities and lending because of that," he told reporters on Monday (Sept 26).

Ahmad Shazli was speaking at a media briefing on Monday after CIMB Bank and CIMB Islamic Bank Bhd entered into a collaboration with Credit Guarantee Corp Malaysia Bhd (CGC) and Syarikat Jaminan Pembiayaan Perniagaan Bhd (SJPP) to mobilise RM30 billion SME financing in 2022 and 2023.

This is double the amount allocated for the group's similar initiative in 2019 and 2020, when CIMB achieved its target of disbursing RM15 billion SME financing in the two-year period.

"I think banks are quite eager to lend to SMEs. Growth rate for SME lending is actually quite decent, [including at CIMB]. For other banks as well, the SME segment has been quite active. I don't actually see that banks are reluctant [to lend to SMEs]," he said.

Although SME loans are riskier, Ahmad Shazli said such risk is mitigated by collaborations with credit guarantee agencies such as CGC and SJPP.

"They (CGC and SJPP) have helped SMEs out there tremendously, and banks are also more comfortable with them being in the market to help defray the risk," he said, adding that the delinquencies of CIMB's SME loans are less than what he has expected.

"Today what we are seeing is [that] a lot of these companies, at least from the point of view of CIMB, are already starting to pay. Their loans are back to how it was before. That is [a testament to] the resilience of some of the SME [loans] we have," he said.

SJPP, meanwhile, also expects to see a rebound in guaranteed amounts this year as the economy normalises, according to Azlan Mohd Agel, senior general manager of management services division of Prokhas Sdn Bhd, a Minister of Finance Inc (MOF Inc) company that manages SJPP, DanaInfra Nasional Bhd, Syarikat Jaminan Kredit Perumahan Bhd and Pengurusan Danaharta Nasional Bhd.

"Over the past few years [we] have been guaranteeing to the tune of about RM16 billion for SMEs in 2020, not just CIMB [but] for all banks. And in 2021 [it] was about RM10 billion. In 2022, we forecast it may go up to around RM15-16 billion. The numbers are huge, so I do not see the banks [stepping] on the brakes," he said.

CGC chief business officer Leong Weng Choong said the business banking teams of Malaysian banks have been setting higher targets every year, indicating a rising interest in this market segment.

"It shows that banks, especially CIMB, are more than happy to lend to their [SME] customers, and for CGC and SJPP, we are more than happy to guarantee.

Although both CGC and SJPP are credit guarantee agencies established to support SMEs in securing loans, Leong said the market has "more than enough" guarantees for the two entities to co-exist together.

"It is our duty, both CGC and SJPP, to actually assist SMEs in Malaysia. By us coming together, it shows that we are friendly parties. All three of us can work together and guarantee SMEs in Malaysia. We don't want to be seen as though we are competing," he said.

CGC is 78.65% owned by the central bank and 21.35% by the commercial banks in Malaysia, while SJPP is wholly owned by MOF Inc.

Read also:
CIMB commits to RM30b SME financing via tie-ups with CGC, SJPP
Zafrul: Govt business facilitation agencies need to help MSMEs sustain recovery

Lam Jian Wyn