SME Bank Strengthens and Surpasses Its Shareholders’ Fund
KUALA LUMPUR : 22 June 2017 – Small Medium Enterprise Development Bank Malaysia Berhad or SME Bank has strengthened and surpassed its Shareholders’ Fund following the Bank’s successful efforts to recoup its accumulated losses where it recorded retained earnings of RM109 million as compared to accumulated losses of RM607 million in 2010. Meantime, the Bank has received the approval to convert its RM500 million financing facilities extended by Ministry of Finance (MOF) to equity resulting in the Bank’s strengthening its paid-up capital to RM1.85 billion from RM1.35 billion in 2016.
Announcing its 2016 financial results today, SME Bank recorded a profit before tax of RM67 million compared to RM48 million in 2015 due to among others, higher contribution from banking operations and better investment results. This performance is supported by continued growth from gross income of the Bank’s Islamic banking business which grew at 15% from RM292 million to RM336 million. The Bank’s net impaired ratio stood at 8.2% given its developmental role as a Development Finance Institution (DFI), and within a single mandated SME sector.
Efforts in bridging the financing gap as well as developing the SME entrepreneurs through its comprehensive initiatives have proven to be successful when its financing portfolio recorded 12% growth or RM666 million to reached RM6.0 billion in 2016 compared to RM5.4 billion in 2015.
Datuk Mohd Radzif Mohd Yunus, the Group Managing Director of SME Bank said, “The presence of SME Bank as a key player amongst the six DFIs in the country is much stronger today looking at the 38% market share that it has garnered thus far. In fulfilling its mandated role, the Bank has successfully migrated upward 1,085 clients from its stable of 15,000 companies through its specific intervention activities that started over the last six years while more than 34,000 participants were coached and trained in various SME development programmes by the Bank through its wholly-owned subsidiary, the Centre for Entrepreneur Development and Research Sdn. Bhd. (CEDAR).”
SME Bank has gone through a significant transformation journey to be where it is today. The Bank embarked into a 5-year Transformation Plan in 2010 to undertake a major overhaul of its business model and processes in order to move ahead and strengthen its mandated roles. The first and most fundamental was to restructure and implement the New Operating Model which basically saw the Bank segregating the Need and Merit based customers thus allowing for greater focus on our beyond financing approach. This was followed by the launching of “Project Wisdom” in 2012 enabling the Bank to practice Shariah principles in its operations. As at to date, SME Bank’s Islamic financing asset stood at 92%. In 2013, CEDAR was established with the intention of offering a unique and effective entrepreneur development and coaching programmes while SMEB Asset Management or SAM was set up to manage the Bank’s stress asset.
The second stage of the transformation plan was to be self-sustaining and to achieve global standard. During this phase, the Bank became a self-sustaining entity thus becoming less dependent on Government funds. This resulted in the Bank being able to pay dividends to the Government since 2012. It was during this time that the Bank started being active in domestic and international DFI associations. The highlight was the Bank’s membership in The Montreal Group (TMG). TMG is an exclusive global forum for state-owned development banks focused on assisting micro, small and medium-sized enterprises. The combined asset of the eight member countries stands at USD2 trillion.
SME Bank, being the only DFI from Malaysia and the ASEAN region is now an official member of TMG, and led the Malaysian delegates for the trade mission to Helsinki on IOT (Internet of Things) and CleanTech sector in addition to attending the Annual General Meeting in early June this year. SME Bank presented a paper on future modality of DFIs and chosen to be part of the working group for innovation and digital banking. Datuk Radzif is also a member of the Board for the Montreal Group.
As at to date, the Bank has received a total of 23 awards locally and internationally. At the international level, among others, SME Bank received the Outstanding Development Projects: Merit Award for its Human Capital Development Programme, winner of the Trade Development category for its Best Exporter Programme and a Special Award for the Best Website during the 40th Annual Meeting of the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP) held recently. Datuk Radzif has also received the Outstanding CEO Award in 2016 from ADFIAP for the work he has done at SME Bank. At the local front, among others, SME Bank has been chosen as the Most Supportive Bank for the Government’s Guarantee Schemes by Syarikat Jaminan Pembiayaan Perniagaan Berhad (SJPP) and received five years in a row the Sahabat Negara SME Recognition Award (2015, 2014, 2013, 2012, 2011) by the Persatuan PKS Malaysia for the Bank’s efforts of nurturing and developing SMEs in the country.
The third stage of the transformation plan which is currently running is the Bank’s focus on bridging the financing gap especially amongst the unserved and underserved segment of the SME entrepreneurs. In short, financial inclusivity is the main focus of the Bank and reaching the target groups directly is the key to the Bank’s success, and this is done through a structured and dedicated outreach programme which is the SME Bank XCESS. In 2016, the Bank held its outreach programmes in 13 locations nationwide and the first national level outreach programme called SME Bank XCESS 2016 attracted approximately 1,200 participants. In total, the Bank has reached more than 3,000 SME entrepreneurs. This XCESS outreach series is continued this year and up to May 2017, SME Bank has covered seven locations nationwide and participated by 1,500 entrepreneurs. The programme will continue until September this year.
In sync with the Government’s initiatives of embracing the future through adoption of digital technology, SME Bank continues to be innovative in its approach of improving the services extended to the SMEs. Using FinTech technology, Big Data Analytics and Digital Marketing are some of the initiatives undertaken by the Bank. Leveraging on technology, SME Bank has introduced the ‘Book Your Banker’ (BYB) feature in the SME Bank Mobile Apps that will enable SME entrepreneurs to secure an appointment on line to meet up with the Bank’s officer at a branch of their choice and at the time that is convenient for them.
With these various initiatives in place, SME Bank’s desire of ensuring financial inclusivity, access to financing and enabling the SME sector to contribute towards achieving the economic agenda will be realized in line with the Government’s aspiration.
