Malaysian retail business on the rocks with cautious consumers

Credit card circulation even dwindled to less than 500k from about 700k.

In release by Nomura, this year is expected to be a challenging one for the retail business given the stiff competition and cautious consumer outlook. The auto segment was soft in 1Q12 due to the implementation of the Responsible Lending guidelines by Bank Negara.

Here's more from Nomura:

However, sales have improved in recent weeks and the latest new car sales figures are more encouraging. Management hopes to do better this year in hire purchase financing (FY12: +0.9%y-y), leveraging on partnership with its top tier car dealers, who enjoy better service quality and incentives.

Credit cards will continue to be a key component of the retail business. Post Bank Negara’s macro-prudential guidelines on credit cards, AMMB’s card in circulation has fallen to <500K from about 700K. Those who left were mainly inactive customers that posed a drag on the division’s cost efficiencies and hence, management is not too concerned about the decline. The size of the book is about MYR1.7bn but AMMB would like to see this division grow in order to enjoy scale.

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