THE small and medium enterprise (SME) business is becoming an important portfolio for banks although there are hurdles which many face in expanding their market share in this business.
In terms of its importance and market size, SMEs at the moment contributes about 32% of the country’s gross domestic product and makes up 59% of total employment. In totality, this segment accounts for 99% of business establishments and contributes 19% of Malaysia’s exports.
Judging from these figures, it explains why banks are eyeing to have a bigger market share for the SME business. Some of the challenges faced by banks in the SME business include the ability to roll out simple and convenient products, the difficulties in reaching out effectively to the SMEs due to their highly dispersed population and in providing a full range of banking services apart from loans.
OCBC Bank (M) Bhd emerging business head Wong Chee Seng says the SME sector continues to be an important part of the bank’s business and will remain so in terms of growth. For this year, he adds the bank has “upped the momentum” and open up more avenues for SMEs to gain financing and enjoy better financial services. These include the participation in various government-initiated lending programmes and the rolling out of more channels for SMEs to perform their banking needs.
OCBC Bank is one of the few foreign banks to be named the Top SMI Supporter by the Credit Guarantee Corporation (CGC), he says, adding that it understands the SME’s nature of business and risk profile despite the diversity of their business.
Wongs says the bank expects improvement this year in terms of revenue growth and loans outstanding for the SME sector compared with last year with more than double-digit growth. Net profit for this sector is also expected to increase by double digit over last year due to improving loans portfolio quality, he notes.
In Malaysia, OCBC has over 200 customer-facing managers in its branches nationwide and they possess in-depth knowledge and skills to deal with various types of SMEs and their respective local and international financing needs.
He says the dedicated Business Banking Centres and Business Banking Commercial Service Centres are other channels which can connect the SMEs to the bank’s suite of business banking products and services.
Wongs says the bank is committed to delivering simple, fast and convenient products and services to assist SMEs in growing their businesses domestically and globally.
