Affin Bank to cater to gig economy

KUALA LUMPUR: Affin Bank Bhd will soon be introducing new products to cater to the segment of workers in the gig economy, which is an emerging employment trend around the world and also in Malaysia.

Affin Bank’s group CEO Kamarul Ariffin Mohd Jamil said the bank would not want to miss out on the growth from this segment of the population.

“We can work together with parties like Credit Guarantee Corporation Malaysia Bhd (CGC) to see how we can make this segment to become a little bit more bankable for banks (like us) especially with the rise of the new economy. “We are coming up with products to cater to this very new segment for the bank,” he added.

Kamarul said that these products are still being developed at the moment and they were expected be launched sometime later this year.

“These will target the people for example those who are in startups,” he said.

The ‘gig economy’ which features short-term work contracts and freelancing has become growing phenomenon of the job market due in part to the the rise of the digital age and the higher flexibility it accords to workers.

Workers who do freelance jobs can be doing several part time jobs for several income streams: for example, a freelance programmer who is also a Grab driver.

According to recent data by the World Bank, about 26% of the Malaysian population are freelancers because of rising demand for more flexible working hours.

Meanwhile, Affin said it followed the rules when lending out to the population amid talk that the banks in Malaysia have become overly conservative in their lending while registering strong growth in profits.

Kamarul said that lending in Affin was mostly guided by the responsible lending guidelines that was formulated some years back.

“In our case we have been growing our mortgage loans.

“I can’t comment on other banks. But we follow the rules as far as this is concerned, such as Bank Negara’s lending guidelines, Kamarul said.

“These growth in mortgages are really to the segments where the central bank and the government has been mentioning about: the affordable segment. I think we have to ensure borrowers don’t overleverage or overgear themselves,” he added.

Finance Minister Lim Guan Eng had been reported in March as saying that the banks should be flexible when lending out to the population because there were many complaints of difficulties in obtaining financing or loans.

Lim recently also reportedly said that prospective house buyers who were denied loans from the banks could lodge a complaint with the Finance Ministry for assistance.

Kamarul said Affin had been growing its housing loans in a ‘big way’ with growth last year at 23% year-on-year.

“This is more towards the affordable side which is an area that the government is focusing on.

“We are very supportive with the government’s effort to promote house ownership especially among the first time buyers and fixed income buyers,” Kamarul said.

On its financial outlook, Affin Bank is targeting to grow its loan book by 3% to 4% and this will be driven by both the consumer and SME segment.

Kamarul said that non-performing loans which was at 3.5% was ‘a little bit high’ due to the impact from 2018 due to a few large accounts.

“We are nursing these two accounts back to health, we hope that in 2019 we will be able to normalise them to bring it below 3%, closer towards the 2% level,” he said.

On net interest margins, Affin expects an erosion of about 5 to 10 basis points this year but it is looking to offset this through better yielding loans but also through a growth in its current and savings accounts.

Source : TheStar