New rules won't hurt consumer financing segment

The article was first published on Business Times.

'New rules won't hurt consumer financing segment'

Muhammed Ahmad Hamdan
2013/07/10

BANK Islam Malaysia Bhd does not see the new regulation on household debts introduced by Bank Negara Malaysia recently as having a negative impact on its consumer financing segment.

Business development director Khairul Kamarudin said Bank Islam is, in fact, optimistic of achieving around a 20 per cent growth in its consumer financing segment this year.

"We welcome the new regulation by Bank Negara. We don't see it affecting our consumer financing segment as we have been practising similar guidelines since two years ago," Khairul said after launching Bank Islam's new Visa platinum credit card here yesterday.

Bank Negara last Friday announced that commercial banks must now set 10 years as maximum tenure for personal loan financing and 35 years for property loans.

"Ninety five per cent of our property loan borrowers has tenures of below 35 years.

"Our personal loan segment only offers a maximum tenure of 15 years, compared to other banks that offer personal loan tenures of more than 20 years," Khairul said.

Housing loan segment accounts for 50 per cent of Bank Islam's consumer financing portfolio, while personal loan is 30 per cent.

"We believe that Bank Islam has strong product distribution channels which will support the growth of our consumer financing segment," he added.

The new rules set by BNM were to curb excessive household debts and to reinforce responsible lending practices by key credit providers.

This is in light of the country's increasing household debts - averaging at an annual rate of 12 per cent over the last five years.

Khairul said Bank Islam expects to secure between 25,000 and 30,000 new subscribers for its new Visa platinum credit card by year-end.

"The target is relatively low as it is based on the industry's performance. Nevertheless, we will run various campaigns and initiatives to attract new subscribers for the Visa platinum credit card, including those who have already subscribed from other banks."

Currently, Bank Islam has a total of 138,000 active credit card members, including 2,000 Mastercard platinum credit card holders.

Its consumer card segment, which comprises 1.6 million cards, constitutes about five per cent of the bank's total consumer financing portfolio.

Ranhill Energy IPO

Another interesting IPO is coming to town. Will post more update such as whether or not it is a shariah-compliant IPO, and the analysts think of its indicative offer price of RM1.85.

Ranhill Energy seeks to raise RM753m from IPO

By Lim Cian Yai
bt@mediaprima.com.my
2013/07/05

Ranhill is due to make its debut on Bursa Malaysia's Main Market on July 31.

KUALA LUMPUR: Energy and utilities firm Ranhill Energy and Resources Bhd is seeking to raise up to RM752.95 million from its initial public offering (IPO).

Ranhill is due to make its debut on Bursa Malaysia's Main Market on July 31.

The IPO entails an offering of 407 million shares, with an indicative offer price of RM1.85 a piece. Of the total, 77 million shares will be available under an offer for sale by a major shareholder, therefore, raising RM142.45 million.

The proceeds will accrue entirely to the selling shareholder, Cheval Infrastructure Fund L.P. Upon listing, Cheval's stake in Ranhill will shrink to 15.8 per cent from 36.2 per cent at present.

The remaining 330 million new shares will be offered to the Malaysian public and institutional investors, raising RM610.5 million to the company.

"We hope to revitalise our capital structure through this listing exercise. We will use some funds to expand to China, which offers us a higher headroom, and also gear up a bit for more investment overseas," said Ranhill chief executive officer Tan Sri Hamdan Mohamad at the launch of its listing prospectus yesterday.

Of the RM610.5 million from proceeds, 60 per cent will be used for debt repayment and 33.6 per cent for business acquisition and expansion to increase Ranhill's market presence.

The company has identified four cornerstone investors that have agreed to buy 118.3 million shares.

They are Lembaga Tabung Haji, Eastspring Investments Bhd, Hwang Investment Bhd and Corston Smith Asset Management.

The book-building exercise started yesterday, with a price range dedicated to institutions being between RM1.70 and RM1.85.

"We received a strong response from investors and the shares are already oversubscribed," Hamdan said.

Ranhill hopes to boost water treatment capacity in China to 1,000 million litres per day (MLD) in the next five years.

It operates five water and waste-water treatment plants there, with a combined capacity of 270 MLD.

"If we hit 1,000 MLD, this will bring us RM500 million in revenue a year and a profit of around RM150 million," he said.

Last year, its business in China brought in RM150 million in revenue to the group.

Hamdan is considered a prodigy in the local corporate world. Along with Cheval, he privatised Ranhill Bhd in 2011 at 90 sen per share.

Its utilities arm, Ranhill Utilities Bhd, was also listed before being taken private by in 2008 at RM3.50 a share.