Business

Tuesday June 30, 2009

Bank Simpanan Nasional profit on target

By YAP LENG KUEN


Bank has already achieved RM160mil net profit

PETALING JAYA: National savings bank Bank Simpanan Nasional (BSN) is on target to achieve a net profit of RM188mil this year compared with RM168mil last year.

As at May, the bank had already hit a net profit of RM160mil.

“This is sustainable profitability. In the past, it had sold shares to show profit. That took a long time to change and now, the bulk of profits is from operations,’’ chairman Datuk Seri Abdul Azim Mohd Zabidi told StarBiz, adding that BSN was coping very well despite the ongoing global economic slowdown.

“We are recruiting staff,’’ he said.

Datuk Seri Azim Mohd Zabidi ... retiring after 10 successful years as chairman of BSN

In Johor, it is hiring 11 tellers as well as 10 new staff members in Sabah.

Loans outstanding from Dec 31, 2008 to May 31 amounted to RM8.3bil compared with RM7.8bil in the previous corresponding period.

Retail deposits increased to RM11.4bil over the same period from RM10.3bil before.

As part of its transformation plan, BSN has broadened its retail base.

“We have managed to achieve more in terms of cost savings,’’ said Azim, who has called it a day as chairman after a successful 10-year tenure.

He will serve his last day at BSN today.

Retail customers use savings accounts, GIRO and GIRO-i (Islamic concept of a trust) whereas corporates use fixed deposits which incur higher interest rate payments.

BSN’s target for retail deposits is RM11.1bil by the end of the year.

In terms of loans and advances, the bulk comprises home mortgages, personal loans and micro-finance.

The personal loans sector made up the largest chunk in BSN’s loans portfolio, comprising 57% of total loans in May.

About 90% of personal loans, with amounts ranging from RM10,000 to RM100,000, are extended to government servants, with repayments via salary deductions, at a flat rate of between 3.5% and 3.75%.

Gross non-performing loans (NPLs) for personal loans are 1.1% of total gross loans.

Micro-finance loans disbursed outstanding for May stood at RM95.5mil which was extended to 6,600 borrowers.

The plan is for micro-finance loans to touch RM200mil by the year-end.

“Demand is good. The gerai (food stalls) business is booming in these hard times,’’ Azim said, but noted that the rejection rate was very high due to stringent credit policy.

NPLs for micro-finance, as at May 31, were 1.8% of total micro-financing (of total loans, they were 0.02%). Micro-financing mainly involves loans from RM5,000 to RM50,000, extended mostly to petty traders.

Interest rates range from 15%-17% per annum (based on yearly rest for TemanMesra and TemaNiaga and on monthly rest for TemaNiaga-i) based on unsecured funding and frequent site visits that incur higher administrative costs.

BSN is repackaging its hire-purchase (HP) loans which had been mainly used to finance national cars at 3.5%.

It is now opening up its HP financing to non-national cars and aims to draw up some competitive rates.

Housing loans, which have experienced tremendous growth at BSN, currently make up 33% of total loans. BSN offers housing loans at the base lending rate of minus 1.5% to 1.8%.

Due to the economic slowdown, NPLs are seen rising mostly for housing loans of RM100,000-RM150,000 and less.

“To curb delinquency and assist customers who face problems in their payments, BSN conducts frequent credit clinics where payments can be rescheduled or proposals will be worked out for the customers,” he said.

In May, the bank rescheduled 389 accounts and worked out proposals for 364 accounts with RM40mil worth of loans.

BSN has a loans-to-deposit ratio of 52% which means it still has a lot of room to boost its loans growth, targeted at 5% this year.

“Originally, 70% of our deposits were to be invested in government securities with the balance given out as loans,’’ Azim said.

BSN had sought exemption and that has now reversed with 30% of its funds invested in government securities and the balance 70% given out as loans.

Since the bank does not give out corporate loans, it will take a bit longer to hit that 70% target.

Net NPL in May was at 2.1% which was slightly above 1.5% last year.

“By year-end, we hope to bring it back to 1.5%,’’ according to Azim.

Among plans to be implemented are Internet banking and the introduction of current accounts followed by overdrafts and other products.

Mobile banking units have been set up to bring the bank to the communities in Kelantan, Terengganu, Sabah and Sarawak.

One more is in the pipeline for Pahang.

Branch rationalisation is ongoing, where two branches that are located near each other will be merged into a bigger branch.

A makeover is also in the works for some of the older branches while more automated teller machines as well as cash deposit machines are being added.

Of his 10 years at the helm of BSN, Azim said: “It has been fulfilling. A lot of plans have come to fruition especially over the last five years. The first five years involved a settling-in period and the drawing up of corporate plans to transform BSN, which has subsequently turned around and become the financial institution that we had hoped it would be.’’


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