Bank Islam: Consumer finance unit unaffected by BNM’s new rule

KUALA LUMPUR: Bank Islam Malaysia Bhd sees no impact on its consumer financing segment with the new regulations introduced by Bank Negara Malaysia (BNM) recently.

Business development director Khairul Kamarudin said Bank Islam is confident of achieving 10% to 20% growth in the segment this year.

“We welcome the new regulation by Bank Negara. We do not expect to see a deterioration in our numbers. If it occurs, it would be marginal not significant,” he told reporters after launching the bank’s new Visa platinum credit card here yesterday.

In a move to reduce household debt, BNM announced new regulations last Friday, which include on a maximum tenure of 10 years for personal financing and 35 years for property loans.

The central bank also prohibits pre-approved personal financing products.

The measures, which take effect immediately, complement the earlier measures introduced in 2010.

Khairul said 95% of Bank Islam’s housing loans have tenures of below 35 years while the maximum tenure for its personal loan segment is 15 years. He said other banks offer a tenure of more than 20 years for personal loans.

He said banks need to improvise and strengthen their distribution channels to ensure sustainable growth in their consumer financing segments.

Bank Islam expects to sign up between 25,000 and 30,000 new subscribers for its newly launched Visa platinum credit card by year-end.

Khairul said the bank has seen demand shifting to premium cards from mid to lower cards since early this year.

“For the premier cards, we saw an increase. It used to be a ratio of 70:30; 70 for the middle to lower income and 30 for the premier cards. Now, lately we have seen the trend going towards the higher income.

“It is an opportune time for us to ride on the wave,” he said.

Bank Islam has 2,000 active platinum cardholders to date. — Bernama

This article first appeared in The Edge Financial Daily, on July 10, 2013.