Koperasi Angkatan Tentera aims to be third co

Koperasi Angkatan Tentera aims to be third co-op bank
Published on The Edge Markets (http://www.theedgemarkets.com)
Sep 14, 2015 | Written by Sulhi Azman | 0
KUALA LUMPUR: Koperasi Angkatan Tentera Malaysia Bhd (KATMB) — a cooperative organisation for
military personnel and officers in the Defence Ministry — expects to get the green light from
Suruhanjaya Koperasi Malaysia (SKM) to become a cooperative bank by year end.
“We have been quietly planning to become a cooperative bank since 2002, as we foresee growing
the business to greater heights and achieve sustainable operations in the long run. Both SKM and
Bank Negara Malaysia have been briefed on our plan.
“So far, the feedback is positive. If all goes well, we hope to receive the cooperative banking licence
and become a full-fledged cooperative bank by [the end of this] year,” KATMB chief executive officer
Datuk Ahmad Zahudi Salleh told the digitaledge DAILY in an interview.
KATMB on Sept 12, 2013, applied to SKM to become a cooperative bank to grow its financing
business by widening its reach to small and medium enterprises, mid-size corporations, and the
public.
“We aim to offer higher margin financing products such as hire purchase, consumer products and
even trade finance,” said Ahmad Zahudi.
It was previously reported that SKM, together with the central bank, target to create four cooperative
banks by 2020.
According to SKM, there are currently 10,914 registered cooperatives nationwide with 7.61 million
members. Two such cooperatives — Bank Kerjasama Rakyat Malaysia Bhd (Bank Rakyat) and
Koperasi Bank Persatuan Malaysia Bhd — have been operating as cooperative banks.
If approved, KATMB will become the third cooperative bank.
Ahmad Zahudi added that KATMB has been working on transforming itself into a cooperative bank,
and part of its efforts include a change in its accounting system from cash-based to accrual-based.
“In the process of preparing ourselves to become a banking entity, we have incurred a 15% increase
in operating expenses as we recruited capable employees. But I do not mind investing in talent, so
long as they can work hard to achieve our vision and mission,” he said.
Among its recent staff additions were a chief operating officer, a chief consumer banking officer, a
chief information systems officer and a chief internal auditor.
As its operating expenses inch up, KATMB’s cost-to-income ratio has risen to 24% in 2014 from 21%
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Koperasi Angkatan Tentera aims to be third co-op bank
Published on The Edge Markets (http://www.theedgemarkets.com)
in 2013. Still, Ahmad Zahudi said it was lower than the banking industry average.
Established in 1960, KATMB — with 153,842 members and 24 branches nationwide — was named by
SKM as the country’s fourth best cooperative organisation in 2014
Currently, KATMB derives 90% of its income from financing activities, which it provides up to
RM100,000 per person with a maximum loan tenure of 120 months. As at Dec 31, 2014, KATMB’s
financing asset stood at RM2.25 billion.
“Our non-performing loan is lower than the industry average of between 3% and 4%,” said Ahmad
Zahudi.
KATMB also owns a 30% stake each in Islamic insurance provider Great Eastern Takaful Bhd and
investment management firm Pacific Mutual Fund Bhd. In the financial year ended Dec 31, 2014
(FY14), KATMB’s investment in associate companies contributed some 4% or RM8.4 million to its
total revenue.
To date, it has invested RM69 million in various investment portfolios, said Ahmad Zahudi, who was
trained as an accountant and had served in the financial and personnel emolument unit of the
Malaysia Armed Forces for 34 years until his retirement in September 2006.
In FY14, KATMB’s net profit grew 6.6% to RM168.96 million from RM158.64 million in FY13, on higher
contribution from its investment activities; however, total revenue dipped 1.7% to RM249.23 million
from RM253.52 million in FY13, on softened financing activities.
Last year, KATMB forked out RM108 million to pay a 10% dividend to its members, slightly lower
than the RM113.9 million or 12% dividend it paid in 2013, as it moved to conserve cash while
meeting its minimum dividend obligation rate.
Since 1990, KATMB has paid RM1.1 billion in dividends to its members, with average annual dividend
rate of between 10% and 15%.
“Going forward, we expect to maintain a double-digit dividend rate or a minimum of 10%, with
payout ratio of not less than 65% of the profit, which we have proudly maintained for the last two
decades,” he said.
This article first appeared in digitaledge Daily, on September 14, 2015.
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author: Sulhi Azman
source: digitaledge Daily
Source URL: http://www.theedgemarkets.com/my/article/koperasi-angkatan-tentera-aims-be-thirdco-op-bank
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