As Executive Director of The Association of Banks in Malaysia (ABM), I am pleased to submit the Annual Report and the Audited Financial Statements for the year ended 31 December 2009 on behalf of the Council.
Introduction
The forces which shaped 2009 for ABM can be aptly summed up in two simple yet impactful words – “change” and “connect”. Against a backdrop of shifts in the global economic outlook and fluidity of movements of human resource under such challenging conditions, ABM not only witnessed several changes to the line-up of the representatives of the Council Banks which make up the ABM Council, including the Chairman Bank and the Chairman but recognized the need to conscientiously take steps to transform itself so as to play a more visible role in engaging and connecting with all its stakeholders, particularly the various consumer groups and business organizations.
In line with a new vision and mission – “Forging public understanding for a responsible and responsive banking industry” which was culled out of ABM’s broad objectives announced when it was formed in 1973, a major focus of the ABM initiatives for 2009 revolved around connecting with the banking public and extending ABM’s presence outside of Kuala Lumpur. Travelling around Malaysia has indeed been both an exhilarating and humbling experience as the hospitable local folks never failed to speak their minds and share concerns with candour.
Without any let-up in the normal operational and industry type issues which constitute the back-bone of ABM’s work, 2009 was altogether an exciting and challenging year which reaped a good measure of success. ABM looks very much forward to carrying the momentum set, which can be gleaned from the report below as well as the calendar of events, into 2010.
Report of Main Activities in 2009
Better Connectivity and Engagement with the Public
The toll-free service called ABMConnect on 1-300-88-9980 which was launched by ABM on 1 December 2008 to supplement the dedicated lines for customer service operated by the majority of ABM’s member banks, continued to slowly but surely gain popularity among the banking public in 2009. In the past, members of the public could only contact ABM on general queries and complaints relating to the local conventional banking industry by calling its general line or writing to ABM. ABMConnect thus serves to bridge any gaps which may occur in the individual bank’s communication with its customers, if necessary, and enables customers to contact ABM more expeditiously.
By the end of 2009, approximately 2,000 calls from members of the public have been recorded, not just from the Klang Valley but also as far away as Miri and Kota Kinabalu, making ABMConnect a nationwide channel. Calls to ABMConnect which is manned by a dedicated team at ABM, Mondays to Fridays from 9:00 am to 5:30 pm generally involve basic personal banking queries, matters relating to credit card repayment, home loans and overdraft facilities. ABMConect was especially effective in dealing with the tidal waves of enquiries from the public on new developments which affected the banking industry from time to time during the year, such as the reduction of the tiered interest rates for credit cards and the introduction of the service tax for credit and charge cards. Thus far, a 100% resolution rate has been achieved, which means that ABM has addressed or assisted in the amicable resolution of matters raised by all the callers since the inception of the service.
Be that as it may, acknowledging the limitations of ABMConnect which is only available during office hours, ABM introduced the online version, named eABMConnect, on ABM’s website on 28 August 2009. The online version allows the public to submit their complaints and/or queries to ABM 24 hours a day, 7 days a week and has been very well received.
Forging ahead in this era of information technology and ever widening use of the internet, ABM knew that it could not afford to over look a meaningful web presence as a vital tool to better engage with its multitude of stakeholders, including an increasingly sophisticated and savvy banking public. Hence on 27 May 2009, ABM launched its fully revamped website at www.abm.org.my with additional functionalities and greater emphasis on consumer education and content relevance through the incorporation of pertinent industry financial data.
In this respect and so as to further promote self financial education online, ABM has (with the kind approval of Bank Negara Malaysia) established a link to Bankinginfo, a website maintained by Bank Negara Malaysia which provides comparative data (including interest rates) on a spectrum of products offered by the commercial banks in Malaysia, on ABM’s own website during the year. By providing this easy access to Bankinginfo, ABM has addressed feedback from the banking public that in deciding which product and bank to go for, customers often face difficulty in making sense of the various interest rate regimes as well as fees and charges. ABM is confident that the link will not only assist the man on the street to derive maximum benefits and savings but will also inculcate in him a practice of shopping around to better appreciate the range of, and differences between, products available in the market.
Given that interactive discourse in cyberspace has clearly seeped into the consciousness of the urban population as indicated by the widespread popularity of such portals in the local internet landscape, the revamped website is indicative of ABM’s seriousness in bridging gaps if any and reaching out to the general public. Plans are in place to further enhance the ABM website with the introduction of an interactive chat function which will allow the public to express their views and thoughts on the banking sector – a crucial component in creating informed and responsive bankers and users.
Continuous efforts to reach out to the public were however not only limited to better connectivity through telephone lines and cyber space. Riding on the success of a maiden outing organized by Bank Negara Malaysia to Pulau Pinang in June 2009, ABM in collaboration with its member banks and Bank Negara Malaysia began to plan face to face interactive sessions with businesses, mainly small and medium sized enterprises (SMEs) in smaller towns and locations not previously covered. Premised on the theme “Majlis Beramah Mesra Bank dan Perusahaan Kecil dan Sederhana – Marilah Meninjau Pilihan Pembiayaan Kewangan Anda Bersama-sama Kami”, the first Financing Fair and state level dialogue for SMEs was held in Batu Pahat, Johor in August 2009. Such interactive sessions will eventually enable member banks to reach out to SMEs in all corners of Malaysia in a phased approach.
Various financial institutions, including commercial banks and development finance institutions, came together to offer a one day, one-stop advisory center to the people in Batu Pahat and the surrounding areas. In this manner, the public could be better assuaged that commercial banks are continuing to be responsive and responsible towards customer needs and to aggressively support SME activities despite the challenging economic conditions.
At the said Fair, an aggregate of 19 financial institutions set up booths where businesses could approach the banks on the financing facilities that are available. Special talks on a variety of subjects including export financing, loan applications and micro financing featured in the agenda. The response from the local community for this debut event was most encouraging.
On the following day, a closed door dialogue involving Bank Negara Malaysia, SME Corporation Malaysia (formerly known as SMIDEC) , Credit Guarantee Corporation Malaysia Berhad and the banks with the various Chambers of Commerce, trade associations as well as the Malaysian Timber Council was held to discuss general banking issues, particularly access to financing. The dialogue provided a platform for the businesses to present their issues and strengthen communication channels with the banks. It also provided an opportunity for the banks to understand the problems faced by the businesses.
A second dialogue with the various Chambers of Commerce, trade associations and the Malaysian Timber Council entitled “Sesi Berinteraksi Bersama Organisasi Perniagaan” was organized in Kuala Terengganu in December 2009 to dovetail with Minggu Kesedaran Kewangan (M2K) 2009 which was held there in October 2009. Issues relating to banking operations, fees and charges as well as access to financing were addressed. Several more state level dialogues and financing fairs are in the pipeline for 2010.
Apart from the state level dialogues, ABM also held several dialogues with various industry organizations such as Bar Council, The Institution of Surveyors, Malaysia, Persatuan Pengguna Islam Malaysia and Malaysian Institute of Accountants during the year to address specific banking related issues faced by their members. Positive feedback has been received affirming that the dialogues have helped to bridge gaps and foster greater understanding between the banks and these organizations.
Discussions with such stakeholders were however not limited to formal dialogue sessions as ABM practices an “open door policy” for the public and has held numerous ad hoc meetings with members of the public and representatives from various organizations who have come to ABM’s office to seek ABM’s assistance on all kinds of financial matters.
During the year, ABM kick-started its public education series with a dialogue entitled “The 2009 Economic Barometer – Why do we say the Malaysian financial industry is liquid?” to explain why the Malaysian financial landscape stayed robust despite the global financial crisis. Representatives from the media, SMI Association of Malaysia, Associated Chinese Chamber of Commerce and Industry of Malaysia and Persatuan Pasaran Kewangan were among those who attended the dialogue. In the presentations and accompanying discussions, the eminent speakers who are experts in their own fields, painted a clear picture of the strong Malaysian liquidity in the financial system which was underpinned by a healthy external position and high savings rate.
Enhancement of the Efficacy of the Banking System
Amendments to the Stamp Act 1949 (“the Act”) which came into force on 1 January 2009 and in particular, the amendments made to item 22(1) of the First Schedule of the Act, raised grave concerns on the part of the banking sector. All loan agreements (except for education loans) became subject to ad valorem stamp duty of RM5.00 for every RM1,000 or part thereof. ABM promptly initiated discussions for and on behalf of the industry with the relevant authorities highlighting the severe implications the amendments would have for consumers in general and the entire banking industry specifically. The cost of financing would be increased substantially, thereby adversely impacting borrowers’ appetite. It is hoped that the prohibitive implications can be contained as ABM persists with its case for a reconsideration or reversal of the amendments.
Tax and accounting issues continued to be a part of ABM’s agenda in the year 2009. With the proposed implementation of FRS139 Financial Instruments: Recognition and Measurement targeted for 1 January 2010, ABM held discussions with the Malaysian Accounting Standards Board (MASB) as well as Bank Negara Malaysia to address issues relating to the implementation of the same. A key concern highlighted to MASB was the operational challenge faced by banks when embarking on an incurred loss model only to have to move to an expected loss approach subsequently. Issues relating to variations between FRS139 requirements and BNM GP3 and GP8 Guidelines were also raised to Bank Negara Malaysia. Member banks are happy to note that Bank Negara Malaysia responded swiftly by issuing the Guidelines on Classification and Impairment Provision for Loans in line with the implementation of FRS139 to replace GP3.
Following from the 2010 Budget announcement that a service tax of RM50 a year would be imposed on each principal credit card and charge card as well as RM25 service tax a year on each supplementary card effective 1 January 2010, ABM worked with the card issuers and the relevant tax authorities to ensure a smooth implementation of the same. To assist cardholders, ABM worked with its member banks to prepare a list of envisaged Frequently Asked Questions to deal with the various probable scenarios to illustrate the manner and timing of the imposition of the said service tax when credit cards and charge cards are issued or renewed. The imposition of the service tax was rolled out smoothly as planned with minimal complaints from the cardholders.
In support of the Government’s initiative to promote electronic payments, commercial banks were encouraged to offer electronic share application facilities via internet banking to improve payment efficiency in initial public offerings. ABM collaborated with Malaysian Electronic Payment System (1997) Sdn Bhd (“MEPS”) to look at a pricing structure that would promote greater adoption of electronic payments on the back of a study on the pricing and governance of e-payment services conducted by MEPS, the findings of which had been duly presented to the National Payments Advisory Council in October 2009.
Throughout the year, various industry issues continued to be addressed by ABM. These included giving input to the focus group set up by PEMUDAH to improve Malaysia’s ranking in the World Bank Report on Doing Business such as shortening the time for registering of property and the issuance of redemption statements as well as release of title by banks, participating in the working groups formed by the Ministry of Housing and Local Government to revive abandoned housing projects and giving input to Agensi Kaunseling Dan Pengurusan Kredit on its debt management programmes.
During the year, ABM organized a dialogue session between the Commercial Crime Investigation Department (“CCID”) of the Royal Malaysia Police and its member banks to understand and address issues relating to fraud affecting the banking industry. CCID shared with the banks its fraud statistics and the modus operandi of some fraud syndicates. Regular dialogues with the Royal Malaysia Police are essential in keeping member banks informed on the latest fraud trends and will continue to be an important forum for sharing going forward.
ABM also liaised and met with other government agencies such as the Ministry of International Trade and Industry on how to facilitate trade and investments in the country and the Ministry of Domestic Trade, Cooperatives and Consumerism on consumer related issues covering hire purchase and credit cards. With the Ministry of Energy, Water and Communications, efforts to promote energy efficiency in Malaysia and financing of related projects were discussed.
Regional Activities
At the ASEAN level, ABM participated in the 39th ASEAN Banking Council Meeting held in Cambodia on 19-20 November 2009. Recognizing the need for ASEAN banks to cooperate and work together, several key programmes were adopted by the ASEAN Banking Council. ABM as the chair for the Permanent Committee on ASEAN Inter-Regional Relations had initiated plans for a study tour to Australia during the year aimed at enabling the ASEAN delegation to exchange experiences and information on banking practices as well as to build inter-regional ties. However, due to the outbreak of the A(H1N1) influenza, the study tour had to be postponed to 2010.
Regionally, as Malaysia’s representatives at the annual meetings of the APEC Financial Institutions dealing with SMEs, ABM together with several of its member banks attended the 6th APEC Financial Institutions Dealing with SMEs meeting in South Korea. The objective of the annual meetings is to review cooperation activities in the past year and discuss future plans among the participating countries. In accordance to the Memorandum of Understanding (“MoU”) signed in 2003, signatory countries meet at least once a year prior to the APEC Finance Ministers’ Meeting and take turns to host the meetings in alphabetical rotation. By way of this rotation, ABM looks very much forward to hosting the next APEC Financial Institutions Dealing with SMEs Annual Meeting and Conference, which will be held in Kuala Lumpur in 2010, with the support of its member banks.
ABM is proud to report that it has signed an MoU with the Uzbekistan Banking Association on 25 August 2009 to promote cooperation between the two organizations and their respective member banks. The terms of the MoU serve to provide avenues for the sharing of experiences through various activities.
Membership strength
As at 31 December 2009, the ordinary membership of the Association remained unchanged at 22 commercial banks operating in Malaysia. The branch network of commercial banks stood at 2,010 branches as at 31 December 2009.
Changes to the Council
At the 35th Annual General Meeting held on 27 May 2009, pursuant to Article 13 (iii) of the Constitution, Affin Bank Berhad, Hong Leong Bank Berhad, Malayan Banking Berhad, Standard Chartered Bank Malaysia Berhad and United Overseas Bank (Malaysia) Bhd retired and were re-elected as Council members. Alliance Bank Malaysia Bhd, AmBank (M) Berhad and EON Bank Berhad were co-opted as Council members for the year.
Malayan Banking Berhad was elected as Chairman Bank for the ensuing year, taking over the reins from Affin Bank Berhad.
Changes to the Council Representatives
The year 2009 saw a number of changes in line up of CEOs of Council Banks who are representatives of the banks to ABM’s Council. We bid a fond adieu to those who have left the local banking fraternity and a warm welcome to their respective successors.
Accordingly, on behalf of all the members of ABM, we would like to take this opportunity to record our heartfelt appreciation to the following former CEOs and Council representatives (in chronological order of their resignations) who have taken time out from their busy schedules to serve not just ABM but the banking fraternity as a whole, and wish them good health and every success as they move on to the next phase of their careers:-
• YBhg Dato’ Sri Abdul Hamidy bin Abdul Hafiz, former Chief Executive Officer (CEO) of Affin Bank Berhad, who retired from the bank on 31 March 2009;
• Mr. Albert Lau, former Group CEO of EON Bank Berhad, who retired from the bank on 26 April 2009;
• Mr. Michael Barrett, former Managing Director of RHB Bank Berhad, who retired from the bank on 30 April 2009;
• Julian Wynter, former CEO and Managing Director at Standard Chartered Bank Malaysia Berhad who resigned on 30 September 2009 to take up a senior position in Standard Chartered Bank, London;
• Ms. Irene Dorner, former Deputy Chairman and CEO of HSBC Bank Malaysia Berhad, who left Malaysia in December 2009 to take up the post of President and CEO at HSBC in New York, USA; and
• YBhg Datuk Bridget Lai, former Group CEO of Alliance Bank Malaysia Berhad, who resigned on 1 March 2010.
ABM would in turn like to welcome the new members who joined the Council in 2009 as listed below (in chronological order of their appointments) and thank them in advance for their generous time and input for the improvement of ABM specifically and the banking industry as a whole:-
• YBhg Dato’ Zulkiflee Abbas bin Abdul Hamid who was appointed as CEO of Affin Bank Berhad on 1 April 2009;
• YBhg Dato’ Tajuddin bin Atan, Managing Director of RHB Bank Berhad effective from 1 May 2009;
• Mr. Michael Lor, Group CEO of EON Bank Berhad with effect from 14 October 2009;
• Mr. Osman Morad who was appointed CEO and Managing Director of Standard Chartered Bank Malaysia Berhad on 21 October 2009; and
• Mr. Mukhtar Hussain, Deputy Chairman and CEO of HSBC Bank Malaysia Berhad, appointed on 15 December 2009.
Last but not least, ABM and its Council laud the appointment of YBhg Dato’ Sri Abdul Wahid Omar, President and Chief Executive Officer of Malayan Banking Berhad as the Chairman of ABM for the term 2009-2010. His hands-on style of management and vast experience will undoubtedly be of benefit to ABM’s aspirations to play a more effective role and to foster better public understanding of the banking industry.
In addition, for the first time in ABM’s history, ABM and its Council welcome the Alternate Representatives of the Council Banks following the change made to Article 18 of ABM’s Constitution, which allows each member of the Council to appoint an alternate representative, in the main, to attend Council meetings.
Conclusion
With clear signs of an improved economic outlook in 2010, the banking industry must be quick to respond to new opportunities and to evolve the way banking is carried out. Only in so doing will the industry be able to forge ahead to meet the challenges of the next decade. Going forward, ABM will build upon what it has achieved in 2009 to do even better in the coming year. ABM affirms its commitment to assist member banks in addressing and resolving issues at the industry level as well as to enhance public relations and understanding. In this respect, ABM looks forward to member banks’ continued support and cooperation.
As always, ABM and its Council wish to record our sincere appreciation and thanks to Bank Negara Malaysia, the Ministry of Finance, Government agencies and other regulatory authorities including the Securities Commission for their assistance and guidance during the course of the year.
On behalf of the Council
Chuah Mei Lin
Executive Director
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