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Risk mitigation will continue to be a priority in building our loan portfolio,
with international syndications, risk reciprocal participating arrangements
and other means of risk sharing arrangements with other domestic and
international commercial banks, export credit agencies and multilateral banks,
whenever necessary.
CREDIT INSURANCE BUSINESS
As the only DFI in Malaysia that offers trade credit insurance, the Bank
continued to strengthen its position with regards to domestic and international
credit insurance in 2013, as evidenced by the increase in the number of new
policies issued up from 39 policies in 2012 to 73 in 2013.
Compared to their developed country counterparts, Malaysian traders have
limited awareness of the importance of credit insurance in mitigating trade risk
such as non-payment in the event of an economic crisis or general uncertainty
in the global economy. This may explain its slow uptake among Malaysians.
Nevertheless, credit insurance’s importance as a banking product can be seen
through its emergence as the second most important product to banking in
developed countries.
Against this backdrop, throughout 2013, the Bank had doubled its effort to
increase awareness amongst local exporters on the benefits of trade credit
insurance, which it is anticipated, will allow the Credit Insurance arm of the
Bank to grow in tandem. As part of its marketing effort, the Bank continued to
actively approach a targeted segment of international traders, in particular those
who sought to venture into emerging markets where trading risks are higher.
With the right strategy in place, the Bank is confident that credit insurance will
be positioned as an important risk mitigation tool by Malaysian exporters, its
growing utilisation in the coming years met with great success.
For FY2013, the Bank’s credit insurance portfolio stood at RM816.78 million.
Comprehensive Policy insurance remained the largest contributor at RM219.62
million, followed by Comprehensive Takaful insurance of RM153.87 million,
representing a 27 per cent and 19 per cent share respectively, of the business.
The East Asian region, meanwhile, recorded the most significant increase for
Medium/Long Term (MLT) Insurance from1.9 per cent in FY2012 to 50.3 per cent in
FY2013, pointing to the increasing success of the Bank’s marketing efforts geared
towards traders in this region. Meanwhile, MLT insurance for Europe fell from
94.7 per cent in FY2012 to 36.2 per cent in FY2013. For Short Term Insurance,
Europe was the trading destination that recorded an increase of 14 per cent,
contributing 26 per cent in 2013, compared to 11.2 per cent in 2012.
Short Term Insurance,
Europe was the trading
destination that recorded
an increase of 14 per cent,
contributing 26 per cent in
2013, compared to 11.2
per cent in 2012
14%
EXIM Bank Annual Report 2013
019