Thursday, Oct 12, 2000
The Ringgit-denominated Infrastructure Notes issues by Bank Pembangunan dan Infrastruktur Malaysia Berhad (BPIMB) which are guaranteed by the Government of Malaysia are not rated by MARC. The Government enjoys the very highest credit standing with respect to local currency obligations due to its unique access to a wide range of resources. To service local currency-denominated debt, governments have discretionary powers to tax and to control and direct the domestic financial system.
Bank Pembangunan Malaysia Berhad was incorporated in 1973 as a government conduit to strategically develop and promote active participation of Bumiputera entrepreneurs. The Bank assumed its present name, Bank Pembangunan dan Infrastruktur Malaysia Berhad (BPIMB) in 1998 following the extension of its mandate, which includes infrastructure financing of projects approved by the Economic Planning Unit (EPU) and the Ministry of Finance (MoF). The revival of infrastructure projects by the government is seen as instrumental to revitalize economic growth.
With total assets of about RM5.0 billion as at 31 December 1999 and 14 branches located throughout the country, BPIMB is amongst the larger DFIs in Malaysia. It is classified as a scheduled institution under section 19 of the Banking and Financial Institutions Act 1989 (BAFIA). The MoF currently has a 99.84% direct shareholding in BPIMB, with the remaining 0.16% held by Bumiputera-Commerce Bank Bhd.
Through an internal reorganization exercise in January 2000, the operations of BPIMB are now divided into four major sectors. The Development Banking Sector focuses on entrepreneurial and industrial development lending to Bumiputera entrepreneurs and SMIs in the manufacturing sector. Loans extended to Bumiputera entities account for over 80% of the sector’s outstanding loans. These loans are primarily funded by the various dedicated loans and grants by the Government. The newly established Infrastructure Banking Sector is responsible for the financing of infrastructure projects that have been identified and approved by the EPU and MoF and the sourcing and channelling of funds for such purposes.
Credit risk management is under the purview of the Corporate Management Sector. The objective is to safeguard and manage the Bank’s financing and investment assets. Amongst the major changes introduced was the tightening of credit standards and supervision of its loans portfolio. Meanwhile, the Services sector’s function is mainly to administer the Bank’s operational aspects including legal, finance, human resources and information technology.
Net loans escalated by 168.8% to RM3.09 billion mainly due to the new infrastructure financing. The adoption of its new role has dramatically changed the Bank’s sectoral exposure. Exposure to infrastructure projects was a significant 59.5% as at 31 December 1999, whilst loans to the manufacturing sector, which used to be the mainstay of the Bank, fell to 18.1% from 40.3% the previous year. The net NPL ratio declined from a high of 33.0% in FY98 to 11.3% in FY99 due to the enlarged net loan base.
BPIMB has as at December 1999, approved 12 new accounts with a total of RM5.05 billion worth of infrastructure loans. The loans are in relation to projects that have already been approved by EPU and MoF. The involvement of specialist consultants and engineers are procured to help in assessing the technical aspects and operational risks of certain projects.
Over the last two years, BPIMB’s capital position was strengthened following the conversion of government loans into capital and cash injection. As a result of the Bank’s massive recapitalization exercise, its share capital had risen more than nine-fold since FY97 from RM105.5 million to RM1.0 billion as at end FY99.
BPIMB’s funding sources typically comprise the Government, its related institutions and international development finance institutions. Most of the funds secured are long-term in nature, ranging from five to 39-year maturities.
After falling to its lowest level in the last five years to RM21.6 million in FY98, BPIMB’s pre tax profit rebounded strongly to RM97.1 million, helped by higher net interest income and the government’s financial assistance which more than offset the loan provisioning. The Bank’s efficiency measure fell to 21.8% as economies of scale were gained from the booking in of larger new loans.
The Government’s continued demonstration of capital support and provision of financial assistance is an important support to the Bank in its role as the financing conduit for the socio-economic development of the nation.
Bank Pembangunan Malaysia Berhad was incorporated in 1973 as a government conduit to strategically develop and promote active participation of Bumiputera entrepreneurs. The Bank assumed its present name, Bank Pembangunan dan Infrastruktur Malaysia Berhad (BPIMB) in 1998 following the extension of its mandate, which includes infrastructure financing of projects approved by the Economic Planning Unit (EPU) and the Ministry of Finance (MoF). The revival of infrastructure projects by the government is seen as instrumental to revitalize economic growth.
With total assets of about RM5.0 billion as at 31 December 1999 and 14 branches located throughout the country, BPIMB is amongst the larger DFIs in Malaysia. It is classified as a scheduled institution under section 19 of the Banking and Financial Institutions Act 1989 (BAFIA). The MoF currently has a 99.84% direct shareholding in BPIMB, with the remaining 0.16% held by Bumiputera-Commerce Bank Bhd.
Through an internal reorganization exercise in January 2000, the operations of BPIMB are now divided into four major sectors. The Development Banking Sector focuses on entrepreneurial and industrial development lending to Bumiputera entrepreneurs and SMIs in the manufacturing sector. Loans extended to Bumiputera entities account for over 80% of the sector’s outstanding loans. These loans are primarily funded by the various dedicated loans and grants by the Government. The newly established Infrastructure Banking Sector is responsible for the financing of infrastructure projects that have been identified and approved by the EPU and MoF and the sourcing and channelling of funds for such purposes.
Credit risk management is under the purview of the Corporate Management Sector. The objective is to safeguard and manage the Bank’s financing and investment assets. Amongst the major changes introduced was the tightening of credit standards and supervision of its loans portfolio. Meanwhile, the Services sector’s function is mainly to administer the Bank’s operational aspects including legal, finance, human resources and information technology.
Net loans escalated by 168.8% to RM3.09 billion mainly due to the new infrastructure financing. The adoption of its new role has dramatically changed the Bank’s sectoral exposure. Exposure to infrastructure projects was a significant 59.5% as at 31 December 1999, whilst loans to the manufacturing sector, which used to be the mainstay of the Bank, fell to 18.1% from 40.3% the previous year. The net NPL ratio declined from a high of 33.0% in FY98 to 11.3% in FY99 due to the enlarged net loan base.
BPIMB has as at December 1999, approved 12 new accounts with a total of RM5.05 billion worth of infrastructure loans. The loans are in relation to projects that have already been approved by EPU and MoF. The involvement of specialist consultants and engineers are procured to help in assessing the technical aspects and operational risks of certain projects.
Over the last two years, BPIMB’s capital position was strengthened following the conversion of government loans into capital and cash injection. As a result of the Bank’s massive recapitalization exercise, its share capital had risen more than nine-fold since FY97 from RM105.5 million to RM1.0 billion as at end FY99.
BPIMB’s funding sources typically comprise the Government, its related institutions and international development finance institutions. Most of the funds secured are long-term in nature, ranging from five to 39-year maturities.
After falling to its lowest level in the last five years to RM21.6 million in FY98, BPIMB’s pre tax profit rebounded strongly to RM97.1 million, helped by higher net interest income and the government’s financial assistance which more than offset the loan provisioning. The Bank’s efficiency measure fell to 21.8% as economies of scale were gained from the booking in of larger new loans.
The Government’s continued demonstration of capital support and provision of financial assistance is an important support to the Bank in its role as the financing conduit for the socio-economic development of the nation.