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AmBank sees the SME segment as a growth segment, having logged double-digit expansion in credit to small businesses. It disbursed RM600mil last year in loans, and expects to lend another RM600mil this year, reports JOY LEE.

FINANCIAL institutions have increased their focus on the SME sector in recent years because the small business segment is seen as one of the pillars of the country’s economic development.

Additionally, the Government is expected to continue efforts to boost SMEs as the primary driver for job creation and GDP growth. And banks, on their part, have been actively rolling out SME products.

“SME is a growth segment for us. We see double-digit growth every year, about 22%-29%,” says Yeow Swee Yun, senior vice president/head of commercial wholesale banking at AmBank.

 

“We have allocated a lot of resources to this segment. Previously, our resources were spread out across the group, but now it is focused under our new initiatives. But we are still able to leverage on available services across the group,” he adds.

According to Yeow, the bank, which has a strong presence in corporate banking, turned its focus on SMEs only in the last two years. Last year, AmBank launched its BizSolutions, a collection of customised financing packages for small businesses.

He explains that AmBank hopes to provide small businesses under its portfolio with the resources to become bigger companies. Its focus areas are in the services, manufacturing, construction and export-oriented sectors.

“SME demand for financing is huge,” he reveals.

“It just depends on the solutions that we can provide them. Despite the circumstances, such as the ringgit depreciation, falling domestic demand and the post-GST situation, the demand for SME financing is still there. But we have to tailor-make products to their individual needs,” he adds.

AmBank disbursed some RM600mil in loans to SMEs last year under its various packages, and this has been well-received, notes Yeow who is optimistic that a further RM600mil will be taken up this year by 200-300 businesses.

Potential clients of the bank will first have to go through a round of consultations with the relationship managers at one of its 14 business centres across the country. This minimises the rejection rate to a low single-digit figure, says Yeow.

Although the SME segment is a growth area, it is also “technically a high-risk” business, he admits. This is because small businesses lack the deep pockets and strong cashflow that larger companies typically have. Nonetheless, Yeow notes that non-performing loans for SMEs are still very manageable at below 4%.

“We hope to add another two to three more products in our SME financing bundle this year, such as GST-financing to help them with their cashflow. Banks have been active in the SME segment. We do have a lot of catching up to do compared to other banks. But we are optimistic,” he says.

Yeow expects the SME segment to continue its strong growth over the next five to 10 years.

 

Source - http://www.thestar.com.my/metro/smebiz/news/2016/04/11/brisk-growth-in-sme-loans/