SME Bank to raise RM3b from sukuk issue

Source From (The Sun Daily): http://www.thesundaily.my/news/368407

Posted on 4 May 2012 - 05:37am
Premalatha Jayaraman
sunbiz@thesundaily.com


KUALA LUMPUR (May 4, 2012): SME Bank plans to issue RM3 billion in sukuk to boost its funds to undertake more business especially for small and medium enterprises (SMEs), said its managing director Datuk Mohd Radzif Mohd Yunus.
He said the bank will raise the funds in stages over a three-year period, with the first tranche expected to be issued in July.
The new capital will be used to finance the tourism, healthcare, wholesale, education, and oil and gas sectors.
"We are projecting our loan growth at 8% this year. At the same time, we are also trying to ensure that the loans coming in are of better quality. Our funding cost is not like the cost that we used to enjoy before, where government provides dedicated funds. So, we are going to raise funds in the market via sukuk issuance," Mohd Radzif said.
Speaking to reporters after announcing its financial performance for 2011 yesterday, he said: "We want to strengthen the foundation of the bank to ensure the sustainability factors are achieved. This is to ensure that we play a significant role is assisting the government to achieve its 40% contribution by SMEs in 2020."
Despite the sukuk issue, he said the bank will continue to receive funds and grants from the government. Since its inception in 2005, SME Bank has received about RM4 billion from the government, which has already been disbursed, Mohd Radzif said.
He said the bank has total funds of RM3.9 billion, including RM2 billion expected to be approved this year.
For the financial year ended Dec 31, 2011, SME Bank returned to the black after two consecutive years of losses with pre-zakat and pre-tax profit of RM146.2 million following several initiatives undertaken during the year.
In FY10, the bank posted a loss of RM69.88 million.
Net income increased to RM231.4 million from RM192.76 million previously.
Mohd Radzif said the stronger financial performance was driven by higher treasury, operation and other income as well as resolved legal cases.