SME Bank registers significant growth from Islamic banking

KUCHING: Bank Perusahaan Kecil dan Sederhana Malaysia Bhd’s (SME Bank) five Year Transformation Roadmap implemented in July 2010 is yielding the desired results, going by its latest performance figures.

For the financial year ended December 31, 2010, the Bank reported a loss after tax of RM71 million in spite of attaining Operating Profit of RM63 million. This was mainly due to increased provisions as a result of higher impaired loans attributed to the Bank’s first-time adoption of the new accounting standard “FRS 139” in 2010.

On a positive note, the bank said that it achieved significant growth in income from Islamic Banking of 45 per cent to RM105 million compared with RM72 million in 2009.

A total of 643 loans were approved amounting to RM799 million with disbursements amounting to RM1,406 million.

Meanwhile, the bank’s asset stood at RM6.5 billion while total liabilities were RM5.7 billion. Shareholders fund amounted to RM752 million. In a statement issued by the bank yesterday, SME Bank’s managing director, Datuk Mohd Radzif Mohd Yunus who assumed the post in July 2011 said, “Various initiatives have been put in place since July last year to create a stronger foundation for sustainable performance.

“The enhanced product packages as required by SMEs’ business needs coupled with improved delivery system under the transformation plan put us in a good stead to deliver better results for 2011.”

“Under the Five Year Transformation Roadmap (2011 – 2015), we have implemented a New Business Model that is driven by determining need or merit based entrepreneurs, desired outcomes rather than funding type. So far, this has been yielding positive results.

“Through this model, SMEs classified as need based with potentials will be assisted by an intensive intervention programme. Merit-based SMEs will continue to receive financing with little intervention from us,” Mohd Radzif said.

“Our immediate target is to increase loan growth and reduce non-performing loans.However, we would like to move eventually towards a self-sustaining and value creation business model.

“We are optimistic that the Bank shall see positive results earlier than 2012 as earlier anticipated.

“Development financial institutions (DFI) cannot be viable over the long-term if they continue to rely on recurrent subsidies,” he added.

The first phase of the bank’s transformation involved among other things, structural reform, service delivery enhancement, improving the infrastructure, human capital development, risk and compliance infrastructure.

Ultimately, SME Bank aimed to be the country’s leading business partner for SMEs and a global referral centre for other DFIs in the world.

SME Bank is wholly-owned by Minister of Finance Inc.The Bank was established in 2005 to enhance SME capacity as enablers of national agenda and aspirations as outlined in the various Malaysia Plans and the New Economic Model.

To date, it has approved loans to more than 5,000 SMEs from various industries.

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