The Macau government has called on local banks to continue offering flexible loan repayment options to help alleviate the financial pressures facing small and medium-sized enterprises (SMEs).
This appeal was a key message delivered during a meeting on Wednesday between representatives of the Macau Association of Banks and a government delegation led by the new Secretary for Economy and Finance, Tai Kin Yip, and Benjamin Chan Sau San, chairman of the Monetary Authority of Macau (AMCM).
In a statement issued by Tai’s office, he emphasised that local banks should provide such repayment flexibility in accordance with their own credit policies, and the Macau Association of Banks should convey this message to its members.
During the Covid-19 pandemic, Macau’s banking sector, under government guidance, introduced several financial relief measures. These included allowing SMEs to extend loan periods by paying only interest without repaying the principal.
However, these relief measures expired at the end of 2024. Last November, the AMCM urged local banks to continue offering flexible loan repayment options to support struggling businesses.
The latest government appeal comes against a backdrop of rising financial stress in the banking sector. The non-performing loan (NPL) ratio of Macau banks reached 5.5 percent in November 2024, the highest level since August 2004.
The NPL ratio, a key indicator of banking sector health, has climbed steadily over the past five years, up from just 0.3 percent at the end of 2019, prior to the onset of the Covid-19 pandemic, according to data from the city’s de facto central bank.
By comparison, Macau’s NPL ratio exceeds the threshold of 5 percent used by the European Banking Authority to classify banks as “riskier.” In contrast, the NPL ratio for Hong Kong’s banking sector stood at 2.2 percent, while mainland China’s was about 1.6 percent, as of September 2024.
During the meeting on Wednesday, Tai also revealed that government departments are “actively preparing plans to promote community economic development” as part of broader efforts to support SMEs. He added that further details of these plans would be announced in due course.
In addition to SME support, the meeting covered a wide range of topics, including the development of Macau’s financial industry, the coordinated economic development of Macau and Hengqin, the current business environment, and strategies for talent development.
Source: https://www.macaubusiness.com/govt-urges-banks-to-help-easing-capital-strains-on-smes/