KUALA LUMPUR: In line with last year’s loan growth, Alliance Bank Malaysia Bhd forecasts loan growth of between 2% and 3% for the fiscal year ending March 31, 2021 (FY21) versus 2.2% il a year ago.

Alliance Bank Group CEO Joel Kornreich (pictured) said the bank is more constrained in lending it takes for FY21 due to the Covid-19 pandemic.

However, he expects the bank to produce around 50% of the loan volume that has been produced in previous years.

“Last year we saw almost 8% growth in SME lending and 3% in consumer lending.

“This year, we expect the growth of loans to SMEs to moderate while consumer loans are likely to be at about the same level, bringing this aggregate to between 2% and 3%,” he said. told reporters after his general meeting yesterday.

Kornreich pointed out that the expected loan growth of 2% to 3% will support the bank’s income for fiscal 21.

Although he expects the bank to post “comfortable” profits for FY21, Kornreich noted that Alliance Bank will post lower profits this year compared to a year ago due to declines in the financial year. Overnight Policy Rate (OPR) and an expected increase in credit costs from the Covid-19 pandemic.

“There is still some uncertainty in the performance for FY 21. It depends on how our clients come out of the moratorium period. It will certainly not be the level seen in FY20” , did he declare.

Kornreich expects the net cost of credit to be kept below 100 basis points for FY21, anticipating an increase in the cost of credit after the moratorium ends.

Regarding the payment of the dividend for fiscal year 21, he said there was still low visibility on the payment as the economic impact of the Covid-19 pandemic is still not clear.

In addition, Kornreich estimated that 20% of Alliance Bank customers withdrew from the moratorium and continued to repay their loans, with the remaining 80% benefiting from the moratorium.

Although he has contacted his clients, he said most of his clients are still unsure if they need help because the six-month moratorium is not yet over.

“However, we are offering special assistance for the relief of payments and an automatic extension of the moratorium for the B40 segment, to customers who are affected in the sectors most affected by Covid-19, as well as proactive packages for those who have lower incomes. ”he added.

The general moratorium ends on September 30.

Meanwhile, Kornreich estimates that 15% of its SME clients would benefit from the bank’s loan modifications, while 20% to 30% of its SME clients have pulled out of the moratorium. Going forward, he said the bank’s priority is to help its customers through financial and non-financial initiatives as well as to accelerate the digitization of the group this year.

“We will financially assist our clients through the extension of the moratorium, loan modifications, those who work in heavily affected sectors, those who have lost their jobs and whose incomes have been affected by the pandemic.

“We will also support our clients through non-financial initiatives, such as helping our SME clients access e-commerce platforms and advertise through social media platforms.

“We have also accelerated our digitization efforts through the recently launched BizSmart eTrade Alliance,” he said.

The bank allocated RM 30 million in capital expenditure for its digitization efforts in FY21.

Alliance Bank will launch a digital Know-Your-Customer solution, which will allow individuals to open a savings account or obtain a loan without having to go to a bank branch.

It also plans to introduce digital lending for SMEs, which provides businesses with a paperless solution to apply for financing online.

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