Interest rate cut to boost demand for loans

KUALA LUMPUR: AmBank Group’s chief executive officer Datuk Sulaiman Mohd Tahir said the recent move by Bank Negara to cut interest rates could help boost demand for loans.

“The interest rate cut can help us, as repayments will be lower. It could also help stave off a further decline in demand for loans that we have seen,” he said at the sidelines of a press conference to ink an agreement with Advelsoft (M) Sdn Bhd.

“The cut will also be less of a burden for business out there. It is a positive move and we also have to match this from the slowdown we are seeing around the world, including our revised GDP forecasts,” Sulaiman said.

He said the cut would help to “balance off” the effects that are being seen around the world from the lowered forecasts.

“I believe one of the main reasons of the cut is to support businesses out there. Whether the cut of 25 basis points is sufficient, this remains to be seen. While the central bank has said that there is no more planned cuts to the rate, this could be one of the measures to support growth, depending on what happens to the economy,” he said.

Sulaiman said the cut could help hold off any further decline in economic activity, given the lowered GDP growth forecasts for this year.

He said while deposits would be challenged due to the cut, the bank also saw opportunities in other alternatives for deposits such as bonds and unit trusts.

“We will focus our efforts on these areas to capitalise on this recent cut in rates. It may not be just fixed deposits anymore since the rates have come down. The area of wealth (management) is something that we would like to focus on,” he said.

“The question would be what are the alternative investments that would do well if there is a slowdown in the economy but there is so much cash. So the area of cash management becomes very important,” Sulaiman added.

He said to grow loans, Ambank would focus on small and medium enterprises (SME).

“Last year, our SME loans growth was at 14.9%. I think this year it will still be very strong at double digits because we have several infrastructure projects ongoing now. The SMEs are direct beneficiaries of this. The opportunities are in the SMEs and not so much in the retail segment,” he said.

AmBank yesterday signed an agreement with Advelsoft to allow building operators and condominium management bodies to use the JomPAY service to facilitate payments with the building’s tenants.


Source : The Star Online / 19 July 2016