daljit@thestar.com.my
PETALING JAYA: Unlike some of their foreign counterparts, banks in Malaysia are not generally expected to tighten credit amid the uncertainty in the global economy.
HSBC Bank Malaysia Bhd managing director for commercial banking Eddie Norton said this was due to the country’s strong economic growth and fundamentals, ample liquidity and resilient banking system.
“We have strong fundamentals in the palm oil and the oil and gas sectors which are key drivers of export receipts and gross domestic product growth.
Eddie Norton
“It is worth noting that corporate liquidity, as measured by deposits with banks, has increased by more than 6% in the past year.
“Furthermore, strong demand for loans has seen outstanding loans rise by about10% last year,” he said in an interview.
According to Norton, Malaysia has a strong banking sector and the competition is such that both corporate and personal borrowers have access to attractive funding rates.
The bank’s corporate lending grew by 10% in tandem with the market, which grew to RM310bil in 2007.
“You only have to glance at the daily newspapers to see the latest promotions in the credit card, personal loan and mortgage markets to realise that there is no obvious sign of credit tightening here.
“On the corporate side there has been no discernible impact on bond spreads and indeed a number of overseas issuers are looking to tap the ringgit market here,” Norton said.
The Asian markets, however, appeared to be relatively less affected by the US and European markets, he said.
He said even last year when credit spreads overseas had begun to widen, there was not much impact on local Asian credit spreads.
Therefore, a local Malaysian company looking to raise US dollars via a bond issue sold to offshore investors would have had to pay credit spreads that were far wider than those payable to local investors on ringgit debt, he noted.
“This is largely because Asian banks have by and large not suffered write-downs or credit losses anywhere close to the extent suffered by their counterparts in the US and Europe,” Norton said.
An official from another bank who concurred with Norton said to an extent the Asian market was decoupled from the US and European markets and the impact would not be excessive.
A spokesman from another bank said the tightening of credit would affect businesses with significant exposure to the US market, but banks had ways to reduce or mitigate cross-border risks.
Norton said: “At HSBC, we pride ourselves on being consistent in our approach throughout the economic cycle. This means avoiding excess (credit/loans) in a bull market and not being overly stringent in a downturn.
“We do this by staying close to our customers, and understanding their business.
“Our assessment will of course be dynamic which means we will take into account the risk factors in the industry and the general outlook.
“Healthy dialogue with your bank is the best way of maximising support when conditions deteriorate.
“We have extensive knowledge on how to structure cross-border trade transactions by using a number of instruments and in accessing the credit insurance market.”
RSS