Exim Bank sees drop in trade financing

Export-Import Bank of Malaysia Bhd (Exim Bank) expects its trade financing volume to shrink by 20% this year in line with the slump in global trade.

The government-owned bank recorded RM1bil in trade financing last year.

Managing director and chief executive officer Mohd Fauzi Rahmat said the slowdown would, however, not stop the bank from continuing to support Malaysian companies as he believed there were still healthy markets amid the challenging economic climate.

“The world’s trade value is forecast at US$13 trillion this year, although the number can be disputed as some trade is unrecorded.

From left: Datuk Mohamed Azahari Kamil, Asian Finance Bank director Fuad Kayeel Saeed, Takaful Malaysia chairman Tan Sri Dr Hadenan Abdul Jalil, Exim Bank chairman Datuk Mohd Hashim Hassan and Mohd Fauzi Rahmat after the signing

“Import and export activities are still strong in Asia, Europe and upcoming markets such as the Middle East,” he told reporters after the signing ceremony with Asian Finance Bank Bhd to part finance Exim Bank’s acquisition of Darul Takaful building via a murabahah term financing of RM55mil. The balance of financing the RM63mil building will be via internal funds.

According to the World Trade Organisation, the global export volume was expected to contract about 9% this year, the steepest dive since World War II.

Fauzi said all banks in Malaysia needed to be supportive of trade as it was the lifeline of the country’s survival.

“In the 1997 Asian financial crisis, trade was the primary factor that pulled us through the difficult period. And Malaysian companies should venture out of the local market due to the slowdown experienced here,” he said.

Asian Finance Bank chief executive officer Datuk Mohamed Azahari Kamil said trade financing demand had been on the uptrend recently due to more small and medium enterprises penetrating the international market.

“Furthermore, the lack of confidence between manufacturers and buyers (in such economic uncertainty) also boosts the volume of trade financing which provides better trading security (insurance),” he said.

Despite the expected fall in trade financing volume, Fauzi said Exim Bank should approve more loans this year. It approved RM300mil loans in the first quarter compared with a total of RM850mil last year.

“We are expanding quite fast in the Middle East market, especially in construction,” he said, adding that the bank’s exposure was mainly in Asia and the Middle East.

Fauzi said Exim Bank, which introduced Islamic financing last month, would continue to produce more related products in the future.

“We are working on one or two Islamic financing products this year and Islamic financing will be our key performance indicator for the next three to five years,” he said.

Exim Bank intends to make the 18-storey Darul Takaful building, which currently has Bank Islam Malaysia Bhd as its anchor tenant, its new headquarters in 2011.

--The Staronline