Consumer banking business set to expand

KUALA LUMPUR: Malayan Banking Bhd (Maybank)
is seeing growth in its consumer banking business, the top revenue
earner for the group, despite numerous measures to cool the sector.
“We
will grow but it will be under controlled aggression,'' said deputy
president and head of community financial services Lim Hong Tat.
The
growth is attributed to improvements under the new “house of Maybank”,
where under a single regional director, there is more teamwork and
synergy.
“Under controlled aggression, we are very disciplined,'' Lim told StarBiz. “That is shown even in times of crisis.''
Maybank's
market share in almost every line of consumer banking has improved over
the last two years: auto 19% (previously 17%); credit cards 15.8%
(14%); mortgage, which dropped at one stage to 12.9%, has now reversed
and gone up to 13.2%.
Half of the group's earnings are derived
from community financial services which comprises consumer banking,
business banking and retail small and medium scale enterprises (SMEs).
As
of March this year, total loans in community financial services amount
to RM123bil, of which consumer banking has given out RM98bil in loans;
business banking RM21bil and retail SMEs RM4bil.
The imposition
of new lending guidelines have, to a certain extent, affected consumer
spending but this can't be quantified due to:
the slowdown of the worldwide economy;
perception of a bubbly economy;
earlier
measures on a 70% loan-to-value for the third property and limit on
credit cards for those earning less than RM24,000 per year.
“The
economy worldwide has slowed down. Europe is in recession, the United
States is struggling. China and India have slowed down although they
are still registering high growth. Malaysia has also slowed down a bit
to around 4%-5% growth.
“The feeling among people buying
properties is that prices have become toppish. In the early part of
this year, the rule was that if you buy a third house, your margin is
capped to 70%. That is already a dampener.
“The responsible
lending guidelines are the latest measures. Even before that, the other
measures have contributed to the slowdown. However, imposition of the
lending guidelines is a good thing. We don't want a situation of
uncontrolled lending like in countries such as the United States,''
said Lim.
He said it was proper that one borrow based on the
ability to repay. “In those days, credit cards were given out even
though the person's income was not sufficient and the amounts extended
kept going up. We can see the damage in some other countries,'' he
added.
In terms of growth, the numbers indicate a moderation
since the guidelines were introduced recently. Housing, which grew 17%
to 18%, is still growing at 13%. The car market has slowed down to a
single-digit growth but at Maybank, it is growing at a lower double
digit of 13% to 14% as at March.
The credit card business has shrank but Maybank is maintaining and even growing its market share a bit.
Meanwhile,
asset quality keeps on improving. For credit cards, the impaired loan
ratio is 1.2% against the industry ratio of 1.3%; auto is at 0.5%
(industry 1.2%) and mortgages 1.9% including legacy loans (industry
2.3% to 2.4%). New mortgage loans are booked at 0.6%.
“We don't see any stress at the moment,'' said Lim.
In
business banking (which is also under community financial services),
Maybank's market share, which grew 10% in the last two years, is
increasing with new strategies in place.
Maybank's market share in SME banking is 19%; this comprises corporate, middle market and retail SMEs.
“We
have an estimated 19% market share in the SME middle market; we are
strong in this segment as we are able to provide more than collaterised
lending, based on business viability,'' said Lim.
Deposits are
also registering double-digit growth (from 15% two years ago to 17%),
the savings market share is strong at 28% to 29% while current account
and savings account is at 24%.
Branches no longer just focus on consumer but also business deposits