SME Bank to unveil new rates in 2012

Besides having new rates for its financing products next year, SME Bank will be operating as a full-fledged Islamic bank


Kuala Lumpur: SME Bank Bhd will announce revised rates for its financing products next year, but they will still be lower than what the market offers to small and medium enterprises (SMEs).

SME Bank managing director Datuk Mohd Radzif Mohd Yunus said the new rates are inevitable because from next year, the bank
will be tapping funds from sukuk, not from the government.

“We are talking to several parties but we cannot reveal who they are yet, but the new rates will come in next year,” Mohd Radzif told the Business Times recently.

Besides having new rates, SME Bank will also be operating as a full-fledged Islamic bank by the middle of next year. “We won’t be issuing any more conventional loans. In fact, we have stopped issuing them for some time. For our existing clients with conventional loans, we plan to talk to them into converting

their loans to Islamic ones, but if they still want the loans in a conventional form, we will allow that until their tenure ends,”
he said.

SME Bank posted a pre-tax profit of RM99 million in its third quarter this year, reversing its RM70 million pretax loss last year.

“We have been making losses for the last two years but we managed
to turn the bank around this year by being more efficient
and improving the way we service our clients,” Mohd Radzif said.

So far this year, the bank had approved over RM1.5 billion loans to 1,100 companies. Since its inception six years ago, SME Bank
had given out a total of RM4.2 billion loans to 3,500 companies.
Out of this, the bad debts amounted to RM680 million, or 19 per cent, of the total loans given.

“These are mostly debts collected from companies when we first merged the bank with Bank Industri. Our debts are expected
to lower to at least 17 per cent by the end of this year,” he said.

Mohd Radzif also said the bank expects its loans rate to grow at least eight per cent next year despite talks of an economic slowdown.

“In 2010, our loan growth grew by 5 per cent, while this year, it was eight per cent. For 2012, we expect our loan growth to maintain at eight per cent,” he said.

The bank plans to give out a total of RM3.15 billion in loans within the next three years.

Mohd Radzif also said the bank will be rolling out three mini branches and 10 satellite offices next year.

"We plan to open branches in Klang, Kajang and Batu Pahat (Johor), along with another 10 satellite offices throughout the country," he added.

SME Bank, owned by the Ministry of Finance, was established in 2005 as a development financial institution to nurture and meet the needs of the SMEs. The bank complements existing SME products and services offered by commercial banks through an integrated financial and advisory services.