BPMB to retain RM100m dividend payout to govt

BANK Pembangunan Malaysia Bhd (BPMB) does not expect to do as good in 2012 as it did the year before due to some impairment charges, but a dividend payout of RM100 million to the government will likey be maintained.

Source from (Business Times): http://www.btimes.com.my/Current_News/BTIMES/articles/devb/Article/
Published: January 02, 2013

Its president/managing director Datuk Zafer Hashim said even though loan approvals for 2012 were very high at RM5 billion, for projects under the Economic Transformation Programme, the bank will still not be able to match its earnings in 2011.

"We'd be making slightly lower profit in 2012 but it must be said that as a development bank, financial targets are not our sole Key Performance Indicators (KPI) but more so whether we have carried out our mandate to assist the government in pursuing its development agenda," he said.

He said a dividend payout of RM100 million in the last 3 years to the government is one KPI the bank is proud of with another being able to play its role as a catalyst for the concept of Private Finance Initiative (PFI) in Malaysia, a new financing approach which most commercial banks prefer to shy away from.


"The fact that we have been a catalyst for PFI projects we can be proud that to a certain extent we have assisted the govt in actually movoing forward one (of its) development agenda. That is a KPI on its own," Zafer said , here recently.

BPMB made a net profit of RM462 million in the financial year ended December 31 2011 from RM369 million in 2011 on higher loans to government-backed projects.

He said 2012's earnings will be impacted by impairment charges of RM120 million on its investments on the mid-range chemical tankers through its subsidiary Global Maritime Ventures Bhd.

"The tanker market has been depressed for the last few years and we do not see a turnaround in 2013 either," he said adding that the bank is also doing some provisioning for some legacy account.

A 10.5 per cent gross non-performing loans (NPL) is expected in 2012 from 12 per cent in 2011 while this year, the bank is targeting it to go down to 8.8 per cent.

Zafer said had it not been for the adoption of new provisioning policy under a new accounting standard called FRS 139, the bank's gross NPL would have stood at 4 per cent.

(FRS 139 calls for an annual account assesment whether or not borrowers have paid or not which leads to a higher number of provisions).

On the amount of loans the bank has approved inn 2012, he said :

"Thanks to the ETP projects, our approval side has been good and we expect to close the year at about RM5 billion which cut across all our main four sectors, infrastructure, maritime, oil and gas and technology."

Infrastructure however remained BPMB's main sector which constitutes more than 60 per cent of its loan portfolio, followed by oil and gas and maritime sectors.

Technology sector, said Zafer has been somewhat slow despite government's push on green technology with the take-up rate for the Green Tech Fund has been slow.

He conceded that it's not easy for banks to approve loans for technology sector even under the Green Tech fund, primarily due to its "greenfield" nature.

"There are a lot of projects that can be technologically viable but it takes greater discipline for that project to be commercially bankable," said Zafer adding that technology projects usually need a robust analysis of risks to see their bankability.

On PFI projects, he said the bank has approved some RM2.5 million of loans over the last 2 years and the bank, he said "takes pride for being a major catalyst of PFI."

He explained that being involved in PFI projects is not an easy task as the financier is also the quasi-developer of the project.