KUALA LUMPUR – Agrobank Bhd is diversifying its income stream to non-financing revenue come 2022, said covering president and chief executive officer Khadijah Iskandar.
She said the bank will still, however, maintain the financing portfolio as its main revenue contributor while continually adding more non-financing revenue to generate more fee income as its Crop Takaful and Agrobank Centre of Excellence (ACE) materialise.
“We will continue to add more non-financing revenue to generate more fee income... this fee income will go up without reducing the contribution from the financing, it’s just that the cake will get bigger,” she told Bernama.
Khadijah said with a renewed vision to “advancing agriculture beyond banking”, Agrobank developed an agriculture takaful or Crop Takaful to ensure the survival of industry players including farmers, livestock breeders and fishermen.
Its objective is to provide takaful protection options to contributors affected by disasters, disease attacks and weather uncertainties which caused a drop in production and affected income, she said.
Meanwhile, Khadijah opined that ACE would also boost its fee income while it helps to equip agropreneurs with the required skillsets through various training programmes and courses.
Some of the programmes and courses include fundamentals of business financial management, fundamentals of business planning, zero-cost marketing, business clinics, myfuture agro, and online masterclasses, among others, partly through collaboration with relevant agencies, she said.
Agrobank, Khadijah said, is of the view that the vaccination progress is expected to hasten the reopening of economic sectors.
Coupled with government stimulus measures, the reopening of economic sectors is expected to stimulate the economy and bode well for the banking sector,” she said.
The bank envisaged its financial performance for the financial year 2022 (FY2022) to improve from FY2021.
It expects financing growth in the local banking system to be between 3.0 and 4.0%, picking up to 4.0%-5.0% growth in 2022, underpinned by higher gross domestic product (GDP) growth.
The Ministry of Finance projected Malaysia’s GDP to strengthen between 5.5 and 6.5% next year, supported by a significant improvement in global trade, stabilised commodity prices, containment of the pandemic, and gradual improvement in consumer and business sentiments.
“The economy is going to improve in 2022 although there will be some uncertainties coming along the way, however, I am of the view that it is quite difficult for us to move back to pre-pandemic levels.
“During the Movement Control Order, some of our branches or even our departments in the head office were forced to close when we had positive cases… so it (the pandemic) will still affect our productivity but we won’t be as bad as before,” she said.
Khadijah noted that Agrobank expects to record profits of about RM100 million, a significant jump from RM40 million recorded in 2020 (2019:RM200 million).
“We are growing higher than commercial banks. If we look at the market trend, the banking sector is growing at about 3% but for Agrobank, we are growing at 5%.
“This is attributed to the fishery and crop industry, which are not really the appetite of the majority of commercial banks,” she said.
Agrobank projects its financing growth to be at 6.9% this year, partly contributed by government assistance such as the Special Relief Facility, Targeted Relief and Recovery Facility, Pelan Jana Semula Ekonomi Negara (Penjana) and National People’s Well-Being and Economic Recovery Package (Pemulih).
Deposits are projected to grow by 6.8% largely in low-cost deposits, in line with Agrobank’s initiative to switch reliance from high-cost deposits to a more stable and low-cost deposit funding.
The bank’s financing growth target in 2021 is RM940 million and as of August 2021, total financing is RM205 million.
Agrobank is Malaysia’s leading development financial institution for agriculture with a strong history of close to half a century in catalysing the agriculture sector through shariah-compliant financial and business advisory support.
It provides a comprehensive repertoire of financing solutions for the agriculture community, from upstream activities related to primary food and commodities-based agriculture activities to downstream activities such as processing, marketing and distribution of agricultural products. – Bernama, November 12, 2021
