Despite the expected slowdown, Malayan Banking Bhd is seeing opportunities in segments of its financial services.
By 2015, it aspires to double its banking business from RM21bil to RM41bil.
“Boosted by opportunities from the Economic Transformation Programme (ETP), the compounded average growth rate (CAGR) is expected to hit 16% from 8% to 10% in the last few years,” says Lim Hong Tat, deputy president and head, community financial services.
Other types of loans expected to notch double digit growth are:
Lim: ‘ We have seen good results especially in the form of deposits from business banking clients; that has grown significantly by 15% to 20%.’
Construction loans, for which RM4bil in outstanding loans has been extended as of Dec 31, 2011.
Trade finance, in which Maybank has a 27% market share as at Dec 31, 2011.
Among all these loans, a new strategy and focus has been drawn up for business banking to double its growth in a few years.
The transformation includes the creation of the “hunter farmer” sales and distribution model, and “go to market” strategy, emphasis on supplier distributor financing while enhancing the existing asset quality framework, which includes sharpening fraud detection techniques.
Essentially, the hunter's job is to look for new business while the farmer will maintain and strengthen existing businesses.
After a year, the hunter passes back the business to the farmer who will spend more time on building relationships and servicing the client.
Going to market essentially involves, among others, more cross sell activities. Maybank has 60% to 70% of consumer-based customers; those in the private banking division where the high net worth individuals are, have been asked to refer more cases to business banking.
In the last few months, the bank has closed RM400mil in this area.
“We are emphasising more on supplier distributor financing and trying to build an ecosystem,” says Lim. Maybank is strong in corporate loans. This sector comprises listed companies, multinationals and government-linked companies - a conducive base for the financing of distributors.
A pilot project is being conducted to provide services to non-borrowing customers, an area which has yielded good results especially in cash management.
Improving asset quality in case of a slowdown in the economy involves strengthening of the know-your-customer concept, fraud detection and risk scoring.
The bank has also fine-tuned on which areas to focus, in line with theETP initiatives especially in oil and gas, oil palm and construction sectors.
The potential for business banking is great. As at December last year, overall business loans which comprise corporate, business banking and retail SMEs, peaked at RM85bil, with a strong market share of 19%.
Since the early 1990s, a commercial banking department had been formed to develop the bank's middle market and SME businesses.
“From RM3bil, we managed to grow this middle market and SME segment by eight times to RM25bil. During those years, we invested in infrastructure and formed 39 business centres,” recalls Lim.
In this respect, Maybank had some innovative products to offer. A customer limit enhancement programme was offered, giving a certain percentage increase in loan facility, on meeting certain criteria, without seeking for more collateral.
Other facilities included account and cash management as well as desktop banking.
“Our business banking position is very strong with a market share of 19% to 20%,” says Lim.
In July 2010, the new house of Maybank was formed. The consumer financial services division, which contributes 50% to group earnings, had included the consumer, business banking (comprising middle market SMEs) and retail SMEs (those with loan size of RM5mil and less) distribution and call centre.
The team reports to one regional director, thereby achieving more synergies and a higher level of teamwork. The bank provides a strong consumer franchise with a network of over 366 branches, 39 business centres and 17 trade finance centres.
Branches that used to focus on just consumers are now positioned to serve and solicit business from all customers. “We have seen good results especially in the form of deposits from business and SME banking clients; that has grown significantly to 20% per annum over the past two years compared with 10% previously.
“Our aspiration is to grow business banking to RM41bil by 2015, with a CAGR of 16% from 8% to 10%.
“There are opportunities from the ETP. If we are disciplined, we can grow aggressively,” says Lim.
Maybank's lending criteria emphasises business viability, and the bank is willing to lend on unsecured basis to eleigible clients for viable and profitable business propositions.
“That is the stand we took on humanising financial services, providing easy access to financing at fair terms and pricing, selling based on need and not providing excess financing,” he says.
From: The Star Biz
Saturday July 7, 2012
