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SME Bank to raise RM3bil via sukuk

KUALA LUMPUR: SME Bank, a government development financial institution, plans to raise about RM3bil over the next three years through a sukuk issue.


Managing director Datuk Mohd Radzif Mohd Yunus said that proceeds from the government-guaranteed Islamic bonds, to be issued from July this year, would be used for lending to the market.


“Our actions are in line with the Government’s Economic Transformation Programme. From the 12 National Key Economic Areas, we are primarily focusing on five, namely, oil and gas, healthcare, education, tourism and the wholesale and retail sectors.


“The bond issuance is part of our new business model, which is to emphasise growth sustainability. The bonds will bring our total financing assets to more than RM10bil after three years. Currently, they are at RM7.9bil,” he told a media briefing yesterday.

On the rationale for the sukuk, Mohd Radzif said although SME Bank continued to receive funds and grants from the Government, the issuance was to sustain the performance of the bank organically.


“We have received about RM4bil from the Government since the bank’s inception in 2005. It has all been disbursed,” he added.


Mohd Radzif said SME Bank was seeking to grow its financing portfolio by more than 8% this year from the current RM3.9bil.


“Our net non-performing loans are at 16%, 10 percentage points better than last year,” he added.


He said, however, that despite the anticipated growth SME Bank expected a lower profit this year owing to a significant increase in funding costs.


Mohd Radzif also said SME Bank aimed to open three more branches, adding to the 18 currently, under the enterprise and business centre concept and had identified locations in Kajang, Rawang and Bintulu (Sarawak).


“The cost of each centre is between RM150,000 and RM250,000. All three will be operational by July this year,” he added.


SME Bank yesterday announced it had returned to the black with a profit before zakat and tax of RM146.2mil in 2011, after two consecutive years of losses. SME Bank reported a loss of RM69.9mil in 2010. Mohd Radzif said last year, the bank had approved 1,380 customers against 635 previously.


— The Star


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