KUALA LUMPUR: Alliance Bank Malaysia Bhd may not be a very big bank, but its plan to thrive in the small and medium enterprise (SME) space is paying off with a targeted 18% loan growth this year.

“Last year, loan growth for SME banking was 16% and we hope to at least maintain that this year,'' group CEO Sng Seow Wah told StarBiz.

The bank's gross portfolio is RM25bil with SME loans amounting to about RM5.3bil. The contribution from SME banking to group pre-tax profit is 16%.

“There is a lot of room to grow,'' said Sng. “We are gaining market share in the SME business. We know it is doing well because our trade finance and transaction banking revenue is growing.''

But there is no plan, at the moment, to push beyond this target.

Sng: ‘Good governance must be practised, and due diligence must be conducted when rolling out new products.’

“People are getting more cautious with their spending, be it retail or corporate. Of late, corporate customers are more careful when it comes to business expenditure.

“The growth momentum is there and we will maintain a target of 18% for SME loan growth this year,'' said Sng.

Besides SME, the consumer loan market is also looking up for Alliance Bank. Housing loan growth was at 13% compared with an anaemic 9% two years ago.

“Hire purchase (HP) is coming up as an area that we want to grow in a focused way,'' said Sng. The HP business at Alliance Bank is now close to RM600mil outstanding.

“HP loan growth is expected to hit double-digit as the business regains its momentum in the next few months. “We have done studies on the right segments and the right types of vehicles to finance, and retooled the staff,'' he said.

Personal loans, which carry among the highest margins, have slowed down due to various external factors.

“What's exciting about the consumer banking business is in the many areas of growth such as wealth management and bancassurance.

“In the last 12 months, we have been building a strong platform for these additional products and launched some innovative products in the market,'' said Sng.

“To do the wealth management business, you need to have a good system which you can track. Good governance must be practised, and due diligence must be conducted when rolling out new products,'' he added.

A good bank must have a balanced portfolio of loans and deposits to ensure sustainability of the business. “In this regard, we believe we've got a good mix to ensure long-term shareholder value.”