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UPDATED: These banks won't compound interest, profit rates during six-month loan moratorium

KUALA LUMPUR (March 27): In line with Bank Negara Malaysia (BNM)’s decision to grant an automatic moratorium on loan payments for six months following the escalation of the fallout of Covid-19, Malaysian banks are doing their bit by announcing that they will not compound interest and profit rates on their loans. This is to further alleviate the financial strain on their individual and small and medium enterprise (SME) customers.

The moratorium applies to all ringgit-denominated loans that are not in arrears for over 90 days.

The following banks have issued statements to announce that they are not compounding interest or profit on their conventional and Islamic financing facilities:

1. OCBC Bank (Malaysia) Bhd

OCBC said it will not be compounding interest and profit on mortgages and loans for SMEs during the period.

This means that these customers will not be charged any interest on the interest that arises from the moratorium period, it said in a statement.

“These are both trying and uncertain times. So we are seeking to alleviate our customers’ burdens as much as we can. Although compounding might be allowed for, we have elected not to do so in light of the pressing circumstances," said OCBC Bank chief executive officer Datuk Ong Eng Bin.

2. Malayan Banking Bhd (Maybank)

Maybank also announced that it will not be compounding interest for all individual, SMEs and non-retail and corporate customer loan facilities that qualify for the loan moratorium.

It noted that its fixed-rate hire purchase loans already do not have compounding interest, while eligible products under the moratorium include personal, mortgage, ASB, education and SME loans.

All Islamic financing facilities’ profit rates are already not compounded in line with Shariah principles.

“The bank hopes that with this additional measure, it will be able to provide them further relief from their financing obligations for this period and help them weather the other challenges they may be facing. The Covid-19 pandemic is an unfortunate situation and the bank is taking this opportunity to do the right thing in line with its mission of humanising financial services. Maybank is committed to relieving its customers’ distress during these trying times, and to allow them to focus on what matters most, which is their family and health,” it said.

3. CIMB Group Holdings Bhd

CIMB Bank and CIMB Islamic Bank are also waiving compounded interest and/or profit on its deferred loan and financing repayments.

For individual customers, eligible Islamic and conventional products under this moratorium include ASB Financing, home financing, auto financing and personal financing (Express Cash, Cash Plus Loan and Awam-i).

Whereas for SME customers, the moratorium applies to all existing term loans/financings and industrial hire purchase.

“CIMB welcomes the proactive measures announced by Bank Negara Malaysia to support Malaysians who are experiencing financial constraints during this challenging period. As a financial group that has always prioritised the well-being and advancement of people and communities, we hope this will help our customers who are faced with financial adversities and allow them to focus on other more critical areas of their livelihood,” said CIMB Group chairman Datuk Mohd Nasir Ahmad.

4. RHB Bank Bhd

RHB Bank Bhd will not be compounding interest for its retail and SME customers during the moratorium period.

The bank said that interest for all retail and SME banking facilities would not be compounded during the moratorium period, with instalment payment amounts remaining unchanged upon the conclusion of the six months.

RHB Banking Group managing director Datuk Khairussaleh Ramli said these additional measures introduced by BNM in partnership with the banking industry provides critical relief to ease the financial burden of individuals and businesses, particularly the SMEs, during this extremely challenging period.

5. Public Bank Bhd

Public Bank will not be compounding interest on monthly instalment payments for loans held by individual and business customers.

For Islamic financing, profit will continue to accrue on the outstanding principal amount; however, it will not be compounded, in accordance with Shariah principles.

“Following Bank Negara Malaysia’s announcement on March 25, 2020, Public Bank further extends the relief assistance to its customers by not charging any compounding interest on the interest that accrues during the moratorium period

“With the escalating Covid-19 outbreak, Public Bank is very concerned about its impact on the nation and hopes this extended financial assistance will provide additional relief to its customers,” said Public Bank managing director Tan Sri Tay Ah Lek in a statement.

6. Standard Chartered Bank Malaysia Bhd and Standard Chartered Saadiq Bhd

Standard Chartered Bank Malaysia Bhd will not be compounding the interest on its conventional loans while profit on Islamic financing by Standard Chartered Saadiq Bhd will not be compounded, in compliance with Shariah law, during the six months.

Products included in the automatic loan deferment programme are personal loans/personal financing-i, residential mortgage/Saadiq MyHome-i or Saadiq MyHomeOne-i and commercial mortgage loan/BizProperty Equity-i and business instalment loan/guaranteed instalment loans/biz-financing-i.

"The uncertainty caused by the pandemic has left many individuals and businesses in the lurch and this is our way of helping them cope and navigate through this tough period," said managing director and chief executive officer Abrar A. Anwar.

7. AmBank and AmBank Islamic

AmBank and AmBank Islamic will not be compounding interest or profit on loans and financing during the six-month pause on loan repayments.

“We welcome BNM’s recent move to provide flexibilities for banking institutions like AmBank to respond speedily to customer needs in times like this. It is our responsibility as a trusted homegrown financial institution to come to the aid of our customers in their time of need. Forgoing compounding interest on top of the six-month payment deferment initiative and the credit card balance conversion programme is our way of giving back,” said AmBank Group chief executive officer Datuk Sulaiman Mohd Tahir in a statement.

8. Affin Bank and Affin Islamic Bank

Affin Bank Bhd and its Islamic counterpart Affin Islamic Bank Bhd announced that they will not be compounding interest and profit for term loans and term financing during BNM’s moratorium.

In line with BNM’s guidelines, all retail and SME customers from both banks will be enrolled in the six-month deferment automatically.

For Islamic financing facilities under Affin Islamic Bank, profit rates are already not compounded, in line with Shariah principles.

“As the current situation is both challenging and filled with uncertainties, we hope the gesture announced today can make this difficult time easier for the customers and communities we serve. We are also committed to consistently identify more ways we can best help our customers”, said Affin Bank chief executive officer Kamarul Ariffin Mohd Jamil via a statement today.

9. HSBC Malaysia

HSBC Malaysia, which comprises HSBC Bank Malaysia Bhd and HSBC Amanah Malaysia Bhd, was the first bank to announce that it would not be compounding interest for conventional loans and profit on Islamic financing held by retail and SME clients during the six-month moratorium period set by the central bank.

“We at HSBC Malaysia welcome and fully support BNM’s loan repayment deferment measures to aid individuals and businesses. HSBC will continue to support Malaysia through ups and downs, and we reaffirm our unwavering commitment to assist the local community during tough times,” said HSBC Bank Malaysia chief executive officer Stuart Milne.

10. UOB Malaysia

United Overseas Bank (Malaysia) Bhd (UOB Malaysia) will not be compounding interest on loans and mortgages for all eligible individual and SME customers during the moratorium period.

Meanwhile, it will not be compounding profit on its Islamic financing facilities, in line with Shariah banking principles.

Customers who wish to carry on with their loan repayments may inform the bank.

“We have been proactively engaging and responding to our customers impacted by Covid-19. By not compounding the interest on our customers’ loans/financing and mortgages during the moratorium period, we want to provide additional relief to our customers and continue to give them adequate support through this difficult period,” said Wong Kim Choong, chief executive officer of UOB Malaysia.

11. Alliance Bank

Alliance Bank Malaysia Bhd will not be compounding interest on its conventional loans.

“This is to help alleviate the financial burden of our individual customers and SME clients during the moratorium period,” said its group chief executive officer Joel Kornreich.

Meanwhile, profit on its Islamic financing facilities will not be compounded, in accordance with Shariah law.

Customers who wish to opt-out of the moratorium must reply to an SMS sent by the bank by March 30.

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