KUALA LUMPUR, June 26 — Alliance Bank Malaysia Bhd is taking the precaution of having additional liquidity to mitigate any payment shock once the loan moratorium ends in September.
Group chief executive officer Joel Kornreich said the bank has a strong funding position currently, with a liquidity coverage ratio of more than 150 per cent and loan-to-funds ratio at 84 per cent.
He said 18 per cent out of the eligible base of RM28.6 billion had opted out of the loan moratorium as they felt comfortable continuing their loan payments with non-recurring additional interest.
“When it comes to our retail clients, of course, our personal finance and car loan clients would not incur any additional interest, which our colleagues in other banks are also abiding by,” he told reporters after a briefing on the bank’s fourth-quarter results for the financial year ended March 31, 2020 (FY20) today.
Kornreich said the loan moratorium would lead to a Day-One modification loss impact of close to RM60 million and a portion of this impact would be unwound over the course of the financial year ending March 31, 2021 (FY21) by about RM35 million.
“We anticipate the net effect in FY21 would be around RM25 million. We are trying to reduce this modification loss impact by engaging our customers, modifying their loans and rescheduling even more...also help them to manage their repayments,” he said.
Kornreich said Alliance Bank had also disbursed the Special Relief Facility (SRF) to its small and medium enterprise (SME) clients to the tune of RM627 million, which corresponds to about 6.5 per cent of its total book of SME clients and 6.2 per cent of total SRF allocation.
The bank has conducted a portfolio review to assess the sectoral exposure to Covid-19.
“We rank our customers in terms of our perception of their risk, whether the sectors they operate in or because of their past behaviour or amounts they have borrowed.
“In fact, we are in the second round of calling our customers to see how we can help them with the right solutions through this crisis, in particular helping them with loan modifications and spreading out their payments...and understanding how they are coping through this period,” he said.
On the overnight policy rate (OPR) cut, Kornreich said the OPR reduction by 100 basis points would have an impact on the bank’s net interest margin by about 18 basis points.
“Of course, we are trying to mitigate the OPR cut by repricing our CASA (current account, savings account) by continuing to grow higher yield products (in green sectors) and we were helped by measures undertaken by Bank Negara Malaysia, including allowing to fulfil the statutory reserve requirement with securities,” he added.
Meanwhile, Alliance Bank is targeting a loan growth of more than 2.0 per cent in FY21, focusing on its core segments, namely SME and consumer segments.
Alliance Bank recorded a higher gross loans and advances of 2.2 per cent year-on-year to RM43.7 billion in FY20. — Bernama
