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SME Bank to start knocking on doors [ 22-08-2012 ]

KUALA LUMPUR: SME Bank Bhd will go knocking on small and medium enterprises' (SMEs) doors to collect debts.

This is part of the bank's measures to manage loan delinquency and rehabilitate bad debts. 

"With engagement, we believe SMEs will voluntarily come to us, so we can help them," said managing director Datuk Mohd Radzif Yunus
SME Bank is targeting to lower its non-performing loans (NPLs) to between 14 and 15 per cent this year.

Last year, the bank managed to shave off the bad debts from 22 per cent to 16 per cent.

Radzif said this year will be more challenging than the bank had anticipated, due to the economic climate.

"Insyaallah (God-willing), we're containing it (NPL) with a multi-pronged approach," he said.

He said the first measure is loan rehabilitation, as most of the abandoned projects are near completion.

"Secondly, in dealing with collection, we are more aggressive. Thirdly, we establish a committee on best practices to manage delinquency and NPL. And fourthly, we look at balance sheet and assess which debts can be rehabilitated via SPV (special purpose vehicle," he told Business Times in an interview.

SME Bank wants to eventually achieve the NPL rate similar to the industry average, where the net NPL rate for DFI (development financial institutions) is two per cent. 

"We'll try to achieve it by 2015," he said.

Besides improving the delinquency and NPL rate, the bank's other plans for this year include strengthening its balance sheet and loan growth; enforcing the foundation of the bank and improving process delivery.

"Internally, we want to improve staff capability and on the development side, we will strengthen our relations with customers and be more engaged with them," he added.

For this year, SME Bank is targeting an eight per cent loan growth to RM4.2 billion, from RM3.9 billion last year.

Radzif said since the bank's inception seven years ago, it had received total applications of RM36 billion, while the approved loans amounted to RM13 billion.

The bank now has about 8,000 customers, mostly by loans. They come from tourism and manufacturing sectors. 

"In future, the client base will be based on sectors under NKEAs (National Key Economic Areas)," he said.

This means the bank will channel most of the financing to SMEs within five areas in the NKEAs, namely oil and gas, healthcare, education, services and construction.


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