Major loans revamp by banks unlikely

Friday August 22, 2008

Major loans revamp by banks unlikely

Minimal action seen from banks other than plans to restructure car loans

PETALING JAYA: The tough economic environment fuelled by higher food and energy prices is unlikely to see banks generally undertaking a major loans restructuring exercise.
Although some major banks have announced plans to restructure hire-purchase loans for cars, there appears to be minimal action for other forms of loans for businesses, homes, and small and medium enterprises (SMEs).

Standard Chartered Bank Malaysia Bhd (StanChart) country head of consumer banking Ho Toon Bah said in today’s challenging times, there was a need to differentiate between caution and pessimism.

“Customer feedback suggests to us that the mood is cautious, but not pessimistic.

“In these times, we support our customers closely with sound and timely advice based on our deep local knowledge and international insights on economic and currency trends, our broad portfolio of yield-enhancing products and continued facilitation of trading activities.

“Are we seeing more instances of loan restructuring as a result of inflationary and growth pressures?

At StanChart, we are seeing minimal restructuring activity. This reflects the resilience of Malaysia’s economy,’’ he said in an interview.

According to Ho, the bank has structured, for launch soon, a fixed rate value-added campaign for its home loans to help home buyers better plan and manage their mortgage commitments.
As for SMEs, restructuring was even less an answer to their financing concerns, he said.

Rather, the bank’s focus was on deepening its understanding of their individual business situation to provide them with the proper financing structures to hedge their risks and costs, and fit their specific working capital needs, he added.

StanChart’s retail mortgage business stood at over RM13bil last year and Ho said it was on track to grow its market share by 8% this year in view of growing demand and various Government incentives.

Sharing similar views with Ho, Hong Leong Bank Bhd (HLB) chief operating officer, personal financial services, Moey Tan said the bank had not seen a significant increase in the number of customers requesting restructuring of their housing loans.

HLB’s current retail mortgage loan portfolio stands at close to RM20bil.

“Over the next 12 months, we expect our loan base growth rate to moderate as per the industry growth rate of 5.6% per annum.

This is in view of slowing new property launches,’’ Tan said.

A restructuring of housing loans to lower monthly instalments would help free up cash to meet the increasing cost pressures, she noted.

OCBC Bank (M) Bhd head of commercial banking Jeffrey Teoh said the bank had always maintained close contact with customers and any request by borrowers to restructure was part of its normal course of doing business - even during less volatile times.

Teoh said: “For cases involving delinquency in loan repayment, we voluntarily enquire if borrowers require assistance to meet their commitments.

“This pro-active measure provides a greater number of options through which we might assist.

“They include increasing the number of facilities, rescheduling of repayments, relaxing of certain conditions and even offering temporary moratoriums on principal payments.”

OCBC Bank’s total customer loans grew by 14% to RM27bil last year and it was looking to keep the momentum up by growing its current market share, he noted without elaborating.
AmBank (M) Bhd managing director (retail banking) Mohamed Azmi Mahmood said the bank’s retail collection initiative, AmCounsel, which was introduced in 2005, had remained stable despite the current economic conditions.

“We have to date assisted and counselled about 6,000 customers facing financial difficulties.

“Our key focus is prevention, education and counselling in working out amicable solutions to overcome the lower purchasing power parity or disposable income faced by the bank’s retail customers, more so the lower income groups, ‘‘ he added.

AmBank’s total retail loans portfolio currently stands at RM42.3bil, of which auto finance make up about RM24bil, mortgage RM11.5bil and credit cards RM1.73bil.

http://thestar.com.my/news/story.asp?file=/2008/8/22/business/1859269&sec=business