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THE MALAYSIA RESERVE – Bank Pembangunan’s financing portfolio grows
Wednesday, 30 June 2021

BANK Pembangunan Malaysia Bhd’s (BPMB) financial portfolio grew by 2.54% in 2020 on higher disbursements to existing clients and new financing.

In a statement yesterday, the bank noted that its gross portfolio size has risen to RM18.5 billion, marking its first growth since 2016.

BPMB chairman Datuk Seri Nazir Razak (picture) said the bank anticipates a challenging year ahead with the Covid-19 pandemic expected to take lives and impair livelihoods for most of the year.

“We will continue to adopt the safest work practices for our staff, be as understanding as we can to help our customers through these extraordinary times and step forward to assist the government as it expands its role to mitigate the debilitating effects of Covid-19 on our economy and society,” he stated after the bank’s AGM.

BPMB’s president and group CEO Arshad Mohamed Ismail added that the bank will continue to support the government to revitalise and reinvigorate the economy through its various products and financing solutions while emphasising on digitalisation, inclusivity and sustainability.

“We recognise that we have a counter-cyclical role to play to ensure those who are most vulnerable are able to brave through the next few years and come out ready to navigate the much-anticipated economic upturn and drive Malaysia into a high income economy,” he said.

In 2020, BPMB undertook an exercise to redeem its borrowings totalling RM1.2 billion ahead of schedule to reduce the bank’s conventional liabilities as part of an effort to become a full-fledged Islamic Development Financial Institution and generate net finance expense savings.

The exercise dropped the group’s total liabilities to RM15.5 billion last year, representing a 7.5% decrease versus the previous year.

The bank’s gross impaired financing ratio improved to 11.3% in 2020 versus 12.2% in 2019 on a larger financing base as a result of the financing portfolio growth. Overhead expenses dipped to RM107.1 million in 2020 from RM113.5 million in 2019.

For the overall financial year 2020, BPMB recorded a net profit of RM107.1 million, which was 57% lower year-on-year (YoY) from RM251.6 million in earnings it made for 2019 as a result of larger allowances for impairment losses on loans, financing and advances all of which had increased by about seven times due to the pandemic’s effects on the economy and customers’ financial health.

Some 75% of impairment allowances for last year were for the construction sector and the hotel industry, the bank noted.

Similarly, at the bank level, earnings fell 68% YoY to RM100.8 million last year.

To help customers through challenging times, the government had announced an automatic six-month loan or financing moratorium to retail and small and medium enterprises in April 2020.

In accordance with the announcement, BPMB granted the same to its larger corporate clients.

As of December 2020, the total value of the moratorium granted by BPMB stood at RM7.1 billion, with the clients in infrastructure and maritime sectors making up the largest beneficiaries.

Targeted assistance was also granted to selected businesses that faced substantial financial strain upon the expiry of the automatic moratorium, via extensions or restructuring and rescheduling of their financial abilities, BPMB added.