Personal loans are due to rise 21 per cent to RM4.6 billion this year from RM3.8 billion last year, chairman Datuk Seri Abdul Azim Mohd Zabidi said in an interview recently.
"BSN is now a different 'animal' after a transformation exercise." Datuk Seri Abdul Azim Mohd Zabidi Chairman Bank Simpanan Nasional
The bank is on track to achieving its target as it has given out some RM4.4 billion in personal loans as at end-June this year.
Housing loans, which form the bulk of its loan portfolio, are due to expand by another RM400 million or 15 per cent to a cumulative RM3.1 billion by year-end.
Mortgages totalled RM2.7 billion as at June 30 2008, which accounts for 37 per cent of its total.
Its customers are set to continue their preference for Islamic loans. Its Islamic assets make up 43 per cent of its loan book of RM3.2 billion at the end of June this year.
"Islamic banking has become more popular in the current situation because people think as the interest rates go up they prefer to lock in, according to the Islamic banking rates," Azim said.
The national savings bank is a statutory body, which means that its products are limited. It is not able to extend trade lines, corporate loans or overdrafts.
It has also started to give out car loans again to civil servants, mostly teachers, after terminating the service about five years ago due to "huge problems".
Azim said BSN is now a different "animal" after its transformation exercise, which has helped improve operations, service and products.
Apart from being equipped with mobile banking and weekend banking facilities, going electronic has also helped the bank to improve its efficiency and traceability of loans.
The bank's gross non-performing loans level is at nine per cent compared with six per cent for the industry. Azim expects BSN to face rising numbers although the bank's current level is still within reach of the industry average.
Malaysians are facing higher food prices as well as a higher petrol price after a 41 per cent hike in June. But BSN is ready to help customers.
"For instance, we may have to step up the repayment scheme in the case of housing loans, to reduce the monthly repayment amounts by half," Abdul Azim said.
The bank has a special monitoring unit for NPLs and delinquent accounts.
"Our advice to borrowers is once your disposable income has shrunk, you need to come back to the bank and we can help to restructure your loan, by increasing the tenure of the loan until good times come round again. Don't wait till the loan becomes a NPL which makes it difficult to justify helping you, as we have to adhere to Bank Negara's strict guidelines."
Microfinancing is still very much in the books, said Abdul Azim and a scheme was introduced last year.
"About RM800 million was disbursed under the first microcredit scheme was introduced, NPLs was high but we slowly brought them down and managed to grow our assets from housing which helped to cushion the NPLs."
Although it was one of the three financial institutions identified under the previous budget for the distribution of microfinance apart from Bank Rakyat and Agro Bank, BSN's market share is small as it prefers a prudent and more conservative approach.
As at June 30, it disbursed RM21.3 million of which 69 per cent was for the retail sector, followed by services at 23 per cent and manufacturing eight per cent.
Under the government's Amal Jariah project to rebuild houses for the hardcore poor, BSN, one of the two financial institutions tasked with the project, has disbursed RM8.8 million out of RM25 million.
Some 1,283 houses have been completed with work in progress on 423 houses.
By New Straits Times (by Rupa Damodaran)
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