KUALA LUMPUR, Aug 27 — Malayan Banking Bhd (Maybank) expects loan growth for the second half of its current financial year (FY20) to remain muted but would reflect its performance in the first half of the year.

The group’s Malaysian operations recorded a steady loan growth of 4.4 per cent as at June 30, 2020 against the industry’s loan growth 4.1 per cent, but was offset by 8.4 per cent contraction in its overseas market.

Group president and chief executive officer, Datuk Abdul Farid Alias said loan growth in the consumer segment was expected to continue as the demand had been consistent although it had slowed down before the Covid-19 pandemic started, but in the non-retail sector, growth had muted due to the slowdown in investment cycle in global trade.

He said Maybank expected FY20 to be a challenging due to external and internal political disruptions, the US-China trade war and uncertainty over the length of the Covid-19 pandemic.

The economy was expected to shrink reflecting the impact of the pandemic and the movement control order (MCO), as well as lower crude oil price, he said.

The MCO would likely dampen consumer sentiment and demand, thus impacting loan growth, while net interest margin (NIM) compression would also continue of up to five basis points this year amid overnight policy rate cuts, he added.

"During this unprecedented time, our primary focus is to maintain the strength of the bank, but at the same time, we have the moral obligation to help our customers.

"We are in the middle of a crisis right now, where we think we should play our role, to help people survive, to help companies survive, to help companies get people employed, and that is what we are focusing on in moving forward,” he told reporters at the bank’s second-quarter (Q2) result briefing here, today.

Also present were Maybank chairman Datuk Mohaiyani Shamsudin and chief financial officer Datuk Amirul Feisal Wan Zahir.

However, Abdul Farid believed the economy would improve in the second half of 2020 as the world’s economy had seen the worst during Q2 2020, reflecting the MCO which translated to limited economic activities.

"Looking at the Purchasing Managers’ Index globally for the month of June and July, we have seen expansionary numbers of above 50 per cent for many of the economies, but again the recovery would depend on the ability to contain the pandemic,” he noted.

On automatic moratorium which is expiring on Sept 30, 2020, he noted that the number of customers that had approached Maybank for further assistance programme is still very small.

"Now till end of September, but may spill to October, we believe many would come back to talk to us. (It’s a) crucial thing for customers to come and talk to the bank to work out a plan.

For customers who had been unemployed because of Covid-19, Maybank could offer the same kind of moratorium till the end of the year, while those whose income had been reduced, their repayment schedule can be worked out based on the reduction and repayment capability, he said.

Abdul Farid said for companies and industries, the bank would look at the impact individually.

He added the bank had also been proactively engaging with customers to remind them on the expiry of the moratorium and to offer Repayment Assistance Package options to eased the financial burden of those affected. — Bernama