Loans to SMEs rise to RM63b

[ 14-04-2008 ]

Loans to SMEs rise to RM63b

FINANCING to small and medium-sized enterprises (SMEs) expanded significantly last year, with more than 132,000 accounts totaling RM63.2 billion, said Bank Negara Malaysia.

In its annual report, it said the disbursements by banks and development financial institutions or DFIs exceeded the projected financing approval target of RM51 billion to 110,000 SME accounts.

Banking institutions accounted for RM55.1 billion in financing approved to 109,497 SME accounts, while DFIs accounted for RM8.1 billion financing approved to 23,477 SME accounts.

Financing applications and approvals by banking institutions grew strongly last year, increasing by 38.8 per cent year-on-year to RM99.1 billion and 37.1 per cent year-on-year to RM55.1 billion, respectively.

Disbursements grew by 5.5 per cent year-on-year to RM141.5 billion, reflecting disbursements to the construction and manufacturing sectors.

The moderate disbursements as compared to strong approvals could be due to lower take-up of financing approved to SMEs, the central bank noted.

"Financing outstanding grew by 9.1 per cent year-on-year at end 2007, as compared to end-2006 (5.1 per cent) mainly driven by higher growth in the construction (9.5 per cent), primary agriculture (4.6 per cent), mining (26.2 per cent), services (10.1 per cent) and manufacturing sector (12.8 per cent).

Non-performing loans (NPLs) by SMEs continued to improve due to full or partial settlements and higher reclassification of NPLs to performing status, as well as efforts by banking institutions to achieve healthier balance sheets through loan write-offs and sales of NPLs.

This has resulted in the decline of NPLs by 3.1 per cent to RM10.4 billion as at end-2007 from RM10.7 billion as at end-2006.

Last year, financing approvals and disbursements of six DFIs under the purview of the central bank increased by 17.9 per cent year-on-year to RM8.1 billion and 15.5 per cent year-on-year to RM4.3 billion respectively, indicating a consistent take-up and utilisation of the approved financing lines by SMEs.

Financial institutions remained the largest source of funding for SMEs, whereas at end-2007, total financing outstanding from banking institutions and DFIs amounted to RM128 billion and was provided to 625,167 SME accounts.

From this figure, banking institutions take the bulk of RM114.2 billion, or 89 per cent, of the total.

Other sources of financing for SMEs include leasing and factoring companies, venture capital companies which provide equity financing, and funds and schemes for the SMEs set up by the government.

There are 105 special government funds for SMEs with a total allocation of RM31.8 billion as at end 2007, mainly for nurturing and developmental purposes.

source: http://www.btimes.com.my/Current_News/BTIMES/Friday/Nation/rup26a4.xml/Article/