Exim Bank’s trade financing to fall 20%

About 67% of the financing deals last year came from the construction, manufacturing and direct export sectors in Asia and the Mideast

THE Export-Import Bank of Malaysia Bhd (Exim Bank), wholly owned by the Ministry of Finance, expects the volume of its trade financing to fall by 20% this year from the RM1 billion managed last year due to unfavourable economy situation.

Exim Bank managing director and CEO Mohd Fauzi Rahmat said trade financing contributes a significant portion of the bank’s loans portfolio with about 67% of its financing deals last year coming from the construction, manufacturing and direct export sectors within Asia and the Middle East.

“The global trade is shrinking. However there are pockets of markets that are still growing,” he told reporters after signing a RM55 million Murabahah financing deal with Asian Finance Bank (AFB) for the purchase of Exim Bank’s new headquarters in Kuala Lumpur yesterday.

The Murabahah term financing for the acquisition of 18-storey tower with 99,022 sq ft of office spaces, which carries a value of at RM63 million, is for a period of seven years.
The remainder of RM8 million will be funded via Exim Bank’s internal funds.

Commenting on the Murabahah financing, Mohd Fauzi said: “We chose AFB not only because of their competitive pricing, but also because we see potential partnership with AFB since they share common aspirations with us in terms of growing their business internationally”

AFB CEO Datuk Mohamed Azahari Kamil said it hopes to work together with Exim Bank in offering counter party guarantee deals in the near future.

He reiterated that AFB is aiming to achieve up to 250% loans growth this year from the RM350 million last year.

He said AFB is already in the early stages of working on three financing deals, which involves the construction sector, worth “a few hundred million (ringgit)” with Exim Bank and other foreign parties.

Mohd Fauzi said the bank is eyeing to finance RM5 billion worth of potential projects that are scheduled for this year. He said RM500 million of the financing will most likely involve Islamic financing.

Despite the challenging economic conditions, Mohd Fauzi said last year Exim approved RM850 million worth of loans, which 40% to 50% expected to be drawn down this year and the remainder over the next two years.