KUALA LUMPUR, 28 June 2020:
It is up to the banks if they wish to extend the loan moratorium in a targeted way, said Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz.
He expressed the view that banks should look into targeted assistance – but they cannot be forced to do so as it within their jurisdiction.
“(There are) A lot of requests from people who need more time for the moratorium. So, this is really up to the banks whether they can or cannot (do so).
“But in my personal view, we ought to help the people who need help,” he told a press conference after making a working visit to the Prasarana headquarters here, today.
Tengku Zafrul said the targeted moratorium extension should be looked at by banks on a case-by-case basis.
Under the Prihatin Rakyat Economic Stimulus Packages, Bank Negara Malaysia has proposed an automatic moratorium on all loan repayments by individuals and small and medium enterprises for six months from April 1 to Sept 30.
“Going forward, I think the best (way) is we focus on the targeted groups who need help.”
He said the borrowers have to engage with their banks early if they feel they need to reschedule their loan repayments. “Especially those who have lost their jobs and had their pay reduced. Please see your bank now and restructure (your loan).”
Meanwhile, Alliance Bank Malaysia Bhd is taking the precaution of having additional liquidity to mitigate any payment shock once the loan moratorium ends in September.
Group chief executive officer Joel Kornreich said the bank has a strong funding position currently, with a liquidity coverage ratio of more than 150% and loan-to-funds ratio at 84%.
He said 18% out of the eligible base of RM28.6 billion had opted out of the loan moratorium as they felt comfortable continuing their loan payments with non-recurring additional interest.
“When it comes to our retail clients, of course, our personal finance and car loan clients would not incur any additional interest, which our colleagues in other banks are also abiding by.”
Kornreich said the loan moratorium would lead to a Day-One modification loss impact of close to RM60 million and a portion of this impact would be unwound over the course of the financial year ending 31 March 31 (FY21) by about RM35 million.
“We anticipate the net effect in FY21 would be around RM25 million. We are trying to reduce this modification loss impact by engaging our customers, modifying their loans and rescheduling even more…also help them to manage their repayments.”
Kornreich said Alliance Bank had also disbursed the Special Relief Facility (SRF) to its small and medium enterprise (SME) clients to the tune of RM627 million, which corresponds to about 6.5% of its total book of SME clients and 6.2% of total SRF allocation.
The bank has conducted a portfolio review to assess the sectoral exposure to Covid-19.
“We rank our customers in terms of our perception of their risk, whether the sectors they operate in or because of their past behaviour or amounts they have borrowed.
“In fact, we are in the second round of calling our customers to see how we can help them with the right solutions through this crisis, in particular helping them with loan modifications and spreading out their payments…and understanding how they are coping through this period.”
On the overnight policy rate (OPR) cut, Kornreich said the OPR reduction by 100 basis points would have an impact on the bank’s net interest margin by about 18 basis points.
“Of course, we are trying to mitigate the OPR cut by repricing our CASA (current account, savings account) by continuing to grow higher yield products (in green sectors) and we were helped by measures undertaken by Bank Negara Malaysia, including allowing to fulfil the statutory reserve requirement with securities.”
Meanwhile, Alliance Bank is targeting a loan growth of more than 2% in FY21, focusing on its core segments, namely SME and consumer segments.
Alliance Bank recorded a higher gross loans and advances of 2.2% year-on-year to RM43.7 billion in FY20.