1hb Julai 2020
Yong: Extend the loan moratorium
Kota Kinabalu, Wednesday, 1 July, 2020
I fully concur with the appeal of the Federation of Chinese Associations Malaysia, Tan Sri Dr T.C. Goh, that the government persuade commercial banks to give an extension of at least three months loan moratorium until at least December 2020. The loan moratorium allowed earlier is set to end in September.
This is because the moratorium on bank loan repayments is the most efficient and most cost-effective way to give maximum impact to the revival of the economy. The adverse economic impact of the Covid-19 pandemic on most countries is now known to be much worse than earlier thought. We can see that some businesses are now closing down around us. Retrenchment and unemployment will increase. More people will become jobless. Families will suffer. We are not blind to the gloomy business environment that is the “new normal”. Nobody knows how long the economic recovery will take because many big economies are only now slowly recovering from the economic damages caused by the pandemic.
Banks make billions annually
Commercial banks, which have been making billions of ringgit of profits each year, should willingly defer their profits in order to give some breathing space to their borrowers. The moratorium will also benefit the banks eventually because, once their borrowers have recovered, the banks will also benefit from the loan repayments and a stronger economy. Nobody is asking the banks to forgo their profits but only to defer the profits.
As an example of bank profits, Public Bank was reported to have made RM1.33 BILLION in the first THREE MONTHS of this year (2020). Their profits for the same period last year was RM1.41 BILLION. As for CIMB Bank, their profit for the same three months this year was RM507.93 million.
Another bank, OCBC, managed to increase its profit by 17% to RM954 million in 2019.
These three examples, as reported, generally show the big profits that banks have been making. As the country and many borrowers are now facing a financial and economic crisis due to the global economic recession and the US-China Trade War, the government should prevail upon the banks to extend the moratorium by three to six months.
Datuk Yong Teck Lee
Ex-Chief Minister, SAPP President