KUALA LUMPUR: Malayan Banking Bhd (Maybank) does not think the loan moratorium will be extended past September.
Maybank group president and chief executive officer Datuk Abdul Farid Alias said the current six-month period was "good enough" for the banking sector and the public in general.
Farid said the whole idea of the moratorium was to give the public some breathing space because the impact of Covid-19 was something that everyone had never experienced.
"So none of us know how long and deep the impact will be. So we need to digest, need time to talk to customers to come out with plan in order to help them repackage their facility and come out from the moratorium in a strong position.
"As for question whether we are going to extend the moratorium, the answer is 'No' because the six-month period is good enough for us to come out with a plan," Farid told reporters virtually after Maybank's annual general meeting today.
In a recent interview, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said it was up to the banks if they wished to extend the loan moratorium.
The government was urged to consider extending the moratorium on bank loan repayments to December to ease financial burdens of the public.
Concerned parties argued that this was a much-needed move because the public, especially small businesses, would have difficulties recovering from the loss of income and jobs amid the Covid-19 pandemic.
Maybank previously announced that there would be a Day-One modification loss for fixed rate financing assumptions, resulting from the moratorium of hire purchase loans, which could amount to RM1 billion.
Farid said Maybank expected the RM1 billion Day-One modification loss to be reflected in the second quarter of its financial year 2020.
More than 70 per cent of Maybank's loan book in Malaysia is currently under moratorium, relief or rescheduling and restructuring programmes.
"For the SME (small and medium enterprise) segment, around 88 per cent of our SME outstanding loans are under the six month moratorium," he said.
Farid said the bank had approved up to RM2.1 billion of Bank Negara Malaysia's Special Relief Fund (SRF) aimed at providing funding assistance. This is equivalent to a 77 per cent approval rate.
He said the bank's total financing to SMEs, including that under the SRF, stood at RM4.9 billion in the first five months of the year. This equalled an 85 per cent approval rate.
Meanwhile, Farid said Maybank's priorities for 2020 included pursuing income-related leads through selective loan expansion in line with the group's risk appetite, non-interest income growth through its investment and trading portfolio as well as debt capital market deals.
This is in addition to prioritising current account savings account growth as a cheaper funding source to mitigate net interest margin compression.
"We will also continue with its existing cost management discipline, while proactively engaging borrowers who are facing tighter cash flow conditions, including oil and gas borrowers given the low oil prices, to render the necessary support needed," he added.
Source: https://www.nst.com.my/business/2020/06/604844/loan-moratorium-extension-maybank-doesnt-think-so