Citibank sees higher revenue through SMIs New Straits Times (Business Times) Monday, July 29, 2002 CITIBANK Bhd expects the growing appetite for credit of small- and medium- sized industries (SMIS) this year to be in line with the improving economy and subsequently boosting the company's revenue from this market segment by 50 per cent. CitiBusiness general manager Jeffrey Chew said the bulk of the new business would come from credit facilities to SMIS, which is expected to reach RM600 million this year. "About 80 per cent of the revenue will be from loans, the rest will come from cash management fees and foreign exchange services," Chew said in an interview. CitiBusiness, which was set up in 1998 to provide financial services to the small- and medium-sized enterprises (SMEs), currently services more than 2,000 clients with about RM2 billion in credit facilities. The SMI sector is one of the market segments identified by the US-based Citibank as the growth engine for its operations in Malaysia. The bank has seen steady growth on its services to consumers, investment products, small business and corporate loans. Chew said the SMIs bring profitable business to the bank and that CitiBusiness'loans for the SMIs make up 12 per cent of Citibank's total corporate loans. The division's annual loan growth for the past two years was 30 per cent and the annual growth is expected to be between 20 and 30 per cent for the next few years. Chew said he was confident that the country will see an economic recovery this year and expects the SMIs to grow in line with the economic consolidation. The optimistic economic outlook has prompted CitiBusiness to launch three new financial products for the SMEs while a few other products are in the pipeline. He said the products are among the flexible financing solutions introduced by CitiBusiness to help the SMEs to grow and expand. One of products is a financing scheme for computer equipment called Global Information Technology Financing Scheme. The other two are Vendor Financing Scheme and Premises Financing Scheme. Vendor Financing Scheme allows the SMES, the suppliers to the multinational corporations, to apply loan without collateral, while Premises Financing Scheme is a programme to encourage SME owners to own factories or shoplots. "We want the SMEs owners who are operating on rented premises to buy factories or shoplots," he said. According to Chew, CitiBusiness will introduce more products and programmes into the market later. Citibusiness is looking at an,other three financial products to be launched in the next 12 months, he added, but declined to elaborate. He said CitiBusiness, which operates from Citibank's branches in Kuala Lumpur, Penang and Johor Baru, has fairly good coverage of states in the western side of the Peninsular Malaysia. There are currently 70 people working for Citibusiness, with about eight people in each Penang Johor Baru branch,serving the south and northern part of the Peninsula. He did not discount the possibility of CitiBusiness increasing its staff strength in the future to serve the growing client base. "There is still a lot of untapped business in Klang Valley itself," he noted. On loan defaulters, Chew said it is at a "manageable level" and "well within our expectation'. He said between three and four per cent of borrowers do not pay on time or pay beyond the due date. "But eventually, all paid their loans," he said, stressing that CitiBusiness encourages its SMI customers to be transparent with the bank so that they can work out a different payment schedule should the borrowers face payment problem. Copyright © The New Straits Times Press (Malaysia) Berhad, Balai Berita 31, Jalan Riong, 59100 Kuala Lumpur, Malaysia