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Agrobank records good financial performance, firmly on track to achieve the 2016-2020 Strategic Business Plan

KUALA LUMPUR – Agrobank, a development financial institution (DFI) with a mandate on agriculture development, today announced a Profit Before Zakat and Taxation (PBZT) of RM230.6 million for the financial year ended 31 Dec 2017 (‘FY2017”), which represents a strong growth of 16.7% against the PBZT for 2016.

The total financing for the year was at RM9.5 billion, achieving a growth of 9.9% compared to 2016. This was led by growth in the agro-based sector which grew by 36.7% whilst primary agriculture financing grew by 12.5%. Agrobank’s share of financing to the agro-food sector grew by 13%, which surpassed the banking industry’s growth of 3.6% in this sector.

According to Tuan Syed Alwi Mohamed Sultan, Managing Director/ CEO of Agrobank, the Bank’s strong growth in 2017 is in line with the Strategic Business Plan 2016-2020 (SBP 2016-2020) of the bank and was also coincidentally buoyed by the overall growth of agriculture sector in the country.

“The bank implemented several strategic initiatives within the SBP 2016-2020 to boost revenue and growth and strengthen asset quality while remaining focused on our mandated sector in agriculture, including agrofood, primary agriculture and commodities. Our achievements were also buoyed by the rebound in the agriculture sector in 2017, which recorded a growth of 7.2% in 2017 after a 5.1% contraction in 2016.  There was steady global demand for palm oil contributed by improved weather conditions following the end of last year’s drought and supported by a 2% rise in the agrofood subsector. In 2017, the agriculture sector contributed 8.3% to the country’s GDP of RM1.16 billion,” said Syed Alwi.

Key Highlights of Agrobank’s performance in 2017:

  • Profit before zakat and tax is RM230.6 million in 2017 – registered growth of 16.7%
  • Total financing was RM9.5 billion – registered growth of 9.9%
  • Agro-based financing grew by 36.7% whilst primary agriculture financing grew by 12.5%
  • The Bank’s mandated financing grew by 12.9% and financing to agro-food grew by 13%


Supporting the Agro Agenda

“Even though Malaysia has transformed from an agrarian economy into an industrialised and service-based economy, the agriculture sector remains an important component of the Malaysian GDP. Since our establishment in 1969, Agrobank has facilitated the growth of the agriculture sector by providing access to capital and financing through our full chain of financing solutions covering upstream, mid-stream and down-stream activities within the agriculture ecosystem.

To demonstrate our focus on the primary agriculture sector, the bank has set an internal target for the composition of primary agriculture to agro-based industry at 82:18. For the year 2017, this composition was at 89:11 and our financing to the primary agriculture sector grew by 12.7%, which further establishes our dedicated development role in the agriculture sector. Our initiatives have also had a multiplier effect in the economy through job creation opportunities, uplifting the socio-economic standing and wellbeing of the unserved and underserved communities while also facilitating agropreneurs build their businesses,” Tuan Syed Alwi added.


Delivered performance through strategic alliances programmes

According to Syed Alwi, in 2017 Agrobank intensified strategic collaborations with strategic partners in providing financing facilities and programmes for various agro communities particularly for smallholders and lower income earners in the economy or the B40 community.

Agrobank expanded its product offerings in 2017 through collaborations with several agencies under the Ministry of Agricultural and Agro-based Industry (MOA). A strategic collaboration was formed with the National Farmers Association (NAFAS) in the states of Selangor and Kelantan to establish the Chilli Fertigation Group Financing scheme. Participants of this chilli fertigation projects under NAFAS are now eligible to apply financing facilities from Agrobank without the need to put up collateral.

Similar collaborations were developed with the Malaysian Pepper Board (MPB) to benefit more than 30,000 pepper crop small holders, while with MADA and BERNAS a special financing program was established that would benefit more than 50,000 paddy farmers. Agrobank also developed many innovative financing and services such as special housing programmes for second generation of FELCRA settlers, Agro Mabrur-i which is an affordable takaful protection which was featured under BNM’s Perlindungan Tenang and micro financing ‘Agro Teras’ for the B40 community.


Empowering agro community through VBI

Agrobank plays a pivotal role in connecting the financial sector to the real economy to achieve a sustainable financial system. As such, the Value-based Intermediation (VBI), a concept mooted by Bank Negara Malaysia bodes well with Agrobank. VBI is focused on improvement of products and services by Islamic financial institutions to add and enhance values for entrepreneurship, community and sustainable environment and economic growth, without compromising on shareholders returns.

“As a DFI with a mandate in the agriculture sector, elements of VBI are deeply rooted in the Bank’s core values, strategies and initiatives. We focus on increasing financial inclusion by providing access to a range of quality financial services by offering financing at affordable rates for agro communities particularly for the underserved and unserved communities. This is deliberately designed to create positive social impact to society,” said Syed Alwi.