KUALA LUMPUR, Aug 30 — RAM Ratings Services Bhd has assigned a AAA/Stable/P1 financial institution rating to Small Medium Enterprise Development Bank Malaysia Bhd (SME Bank), reflecting its expectation of strong government support for it.
In a statement today, it said the bank had been mandated to support SMEs through the provision of financing and advisory services, highlighting its strategic role in the government’s socio-economic agenda to develop the sector.
“SMEs are a critical component of the Malaysian economy, accounting for 36.6 per cent of the country’s gross domestic product (GDP) and 65.3 per cent of total workforce in 2016.
“Under the SME Master Plan (2012-2020), the government has targeted to increase SME contribution to the GDP to 41 per cent by 2020,” it said.
SME Bank accounts for around 40 per cent of SME financing among development financial institutions, though its overall market share is small.
Apart from bridging the financing gap of the unserved or underserved SMEs, SME Bank is also the government’s conduit in developing the targeted sub-segments of the SME sector through specific financing programmes.
Government support for SME Bank was highlighted by a recent conversion of RM500 million of government borrowing into equity and continuous funding support from it through lending, deposit placements and guarantees.
About 83 per cent of SME Bank’s profit-bearing funds were sourced from the government/government-related entities or guaranteed by it as of end-March 2017. — Bernama
