Tell-tale signs from banks’ rising provisions

TheStar Sat, Dec 05, 2020 10:10am - 3 years View Original


Banks are already being coerced by Bank Negara to be “extra accommodative”. Under Bank Negara’s watch, banks are already being cautious in collecting amounts due.

Elk-Desa Resources Bhd is one of the largest second-tier financing companies. It mainly offers loans to second-hand car dealers while a small portion of its assets is tied to people wanting to buy furniture on credit.

Its customers are mainly people from the bottom 40 category who do not qualify for loans from the tier-1 financial institutions which are commercial banks.

In the latest quarterly results, ELK-Desa stated that it would stop giving out loans in these two segments for the next 12 months, as the amount it has set aside for bad loans has gone up by 83% to RM16.64mil, causing its profit to decline by 36% to RM16.09mil.

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