Malaysia's best bank for SMEs 2020: Hong Leong Bank
Hong Leong Bank
Hong Leong Bank (HLB) has endured a lot in its 115-year operating history: two world wars, the Great Depression, a string of modern financial crises. But Covid-19 offers a unique problem for a bank that has become increasingly committed – and, as a result, exposed – to Malaysia’s small and medium-sized enterprises.
In 2017, a little more than a year after chief executive Domenic Fuda came on board, the HLB SME Banking unit opened its doors, with 21 service centres around the country and more than 200 community business managers to extend credit to companies on the front lines of Malaysia’s burgeoning middle class.
In the first half of 2020, HLB’s community banking initiative grew briskly, with loans up 37.7% year on year and 8.1% quarter to quarter for the period ending June 30, the latter result reflecting a Covid-related downturn. Loans and financing activity increased 8.9% in the April-to-June quarter of 2020 compared with the same period a year ago.
Fuda is particularly proud of the ‘SME Grow’ initiative. It targets startups and micro enterprises to increase job growth from the ground up. HLB realized that SMEs in operation for three years or less had been an underserved market. The bank teamed up with Credit Guarantee Corporation Malaysia Berhad to launch a facility that mixes loans and bank overdrafts. HLB stands alone in offering microfinancing to newer businesses, demanding zero collateral and financial documents.
The focus for the rest of 2020 is inevitably going to turn to damage control as the pandemic slams global growth. HLB initiated a customer financial relief plan that was launched in February, well ahead of the central bank’s own guidelines.
With many SMEs coming to a standstill, business-wise – and some already staring into the abyss, operating at just 10% to 20% of their usual business capacity – Malaysia faces unprecedented hardship this year.
The good news is that Fuda and his team are working methodically to support an SME sector that they still think offers huge potential in the years to come.