Kuala Lumpur, Wednesday, 25 March 2020 – The Association of Banks in Malaysia (ABM) is fully supportive of pro-active measures announced by Bank Negara Malaysia (BNM) today to mitigate the economic impact caused by the ongoing Covid-19 virus outbreak globally.

ABM has always recognised its key role in not only supporting the nation’s economic development but also the overall well-being of individuals and communities. The Association also takes cognisance of the fact that the country is in unchartered territory and this is an unprecedented catastrophe affecting the entire world, vastly different from the usual market downturn or financial crisis that have impacted countries in the past, and that unconventional approaches would need to be taken to address the impact. In this regard, ABM applauds the various initiatives taken by the Government and BNM thus far in dealing swiftly with the crisis.

We have from the outset been in discussion with BNM on possible measures that can be taken to address the impact of Covid-19, particularly looking at how borrowers can be provided relief even as the government focuses on combating the spread of the virus and ensure the country’s economic growth is sustained.

Recognising that the current situation is of a health issue, which is affecting the behaviour and confidence of consumers and corporates, the banking industry believes that there needs to be unique solutions applied in this instance. ABM member banks are in full agreement of the intent of the moratorium announced by BNM which we believe is a necessary solution at this point. We are currently working out the full details of the proposals to ensure they will be efficiently executed with minimum inconvenience to customers.

As a summary, ABM members will grant effective 1 April 2020 an automatic extension of credit facilities in existence today for a period of six months to retail (excluding credit cards) and SME customers. While interest will accrue during this moratorium period, there will be no payment of interest and principal required for credit facilities for the six month period. As for the segments other than these, the moratorium will apply on a case to case basis and customers should be in touch with their bankers to discuss the specific relief sought.

Banks acknowledge the vast majority of customers act responsibly on repayments, and apart from adverse circumstances (e.g. illness, marital status change, loss of jobs) we have no reason to believe there will be a change in this behaviour. The moratorium is the best measure to provide greatest assurance of job preservation in the midst of personal financial adjustment. It is also in the best interest of all that everyone is back to full employment. In this regard, we anticipate that any adverse asset quality issues will be relatively short-lived and temporary in nature.

In the meantime, ABM wishes to clarify that it has presented a number of requests to BNM, specifically in respect of the recognition and classification of assets, policies regarding MFRS9, liquidity and capital, as well as market behaviour concerning deposit taking activities. While these are in discussion, ABM would like to give the assurance that these requests, if granted, will not pose undue risks to the financial industry in Malaysia, given that banks have been prudent in managing their capital levels beyond regulatory requirements.

Chairman of ABM, and Maybank Group President & CEO, Datuk Abdul Farid Alias said, “The measures announced have been designed not only to support customers in this highly unusual global environment, but also to ensure that banks can continue to play their role in sustaining the country’s economy. We hope it will provide customers some breathing space and allow them to focus on other critical aspects of their livelihoods at this time.”

Omar Siddiq, Officer in Charge, CIMB Group said, “Banks are fully supportive of the new measures announced today, as they are in the best interest of all stakeholders as well as the country. Clearly, we are able to take this approach given the strength of our banking system and we will continue to balance prudence with innovation to ensure that we are flexible at all times.”

Dato’ Khairussaleh Ramli, Managing Director of RHB Banking Group added, “The additional measures that BNM, in partnership with the banking industry have put in place, address the root of the situation that the country is currently going through as a result of the Covid-19 outbreak. Providing critical relief to both individuals and businesses during this challenging period will ease their financial constraints and will provide them with the much needed breathing space to re-assess their financial positions, particularly those directly affected by Covid-19. I am confident that the measures introduced will lay a strong foundation for a faster economic recovery once the situation goes back to normal.”

Tan Sri Tay Ah Lek, Managing Director/Chief Executive Officer of Public Bank added, “These are indeed proactive measures that address immediate and key concerns of customers. The automatic approach will enable banks to process the moratoriums more efficiently to ensure immediate relief to those most in need. We have confidence that these measures will help speed up the recovery curve for the country once the pandemic is arrested and help economic activity to accelerate without any hindrance.”