KUALA LUMPUR: Both lenders and consumers would need to take a hard re-evaluation of their financial positions in 2022, according to Experian.
The global information services company said lenders would also need to innovate new ways to provide the best refinancing to support consumers in difficult times. In contrast, borrowers need to be proactive to secure the immediate assistance they require to overcome immediate adversities.
Experian Information Services Malaysia chief executive officer Dawn Lai welcomed the support announced by the government on the implementation of the Financial Management and Resilience Programme (URUS) for eligible borrowers who were adversely affected by the Covid-19 pandemic.
"The B50 segment of Malaysians who may have been disproportionately affected by job or income loss can receive the right support until they can be financially stable again.
"We urge Malaysians to step forward by the end of this month and contact AKPK or your bank to apply," she said in a statement today.
Meanwhile, Experian said most local consumers had maintained their credit repayments over the last two Covid-19-impacted years.
This was based on Experian's consumer credit score study by Experian i-SCORE (i-SCORE), a numerical indication of an individual's creditworthiness at a point in time.
Experian has seen a slight lift, with the average credit score rising 18 points from 601 in 2019 (before pandemic) to 619 in 2021, the highest average i-SCORE over the last four years.
This performance indicated that Bank Negara Malaysia's intervention through loan moratoriums and other support measures may have contributed positively to this trend.
It added that there may have been behavioural changes among Malaysians towards conservative spending during this challenging economic climate.
This was one of the key findings in Experian Malaysia's first annual State of Credit 2021 Report on Consumers.
This report highlighted how Malaysians, age 22 and older, managed personal finances over the past four years.
The report viewed the credit performance of consumers across Malaysia, highlighting consumer credit scores and borrowing behaviours to credit.
Experian's State of Credit Report captured three central themes of the pandemic, which have had a major impact on consumer credit behaviour.
These included the success of Malaysia's fiscal support packages, the economic resilience of Malaysian households, and (3) unique behavioural shifts brought on by the pandemic.
The report showed the decline in delinquencies on credit payment due to the government support measures.
"This is demonstrated across all age groups, despite a time of increased unemployment and economic uncertainty."
The percentage of individuals with 90 days past due (DPD) date for credit payment decreased by 0.7 per cent from 2.5 per cent in 2018 to 1.8 per cent in 2021.
Malaysians aged 22-28 have the highest average DPD across all four years but showed a decrease from 6.2 per cent to 3.8 per cent, said Experian.
It also revealed that Malaysians aged 35 and younger have the lowest i-SCOREs among the five age groups studied.
"Apart from their younger counterparts who may not have the same income security, 29–35-year-olds may also be grappling with higher financial commitments as they enter the family establishment stage in their lives.
"As such, these two groups may also need to pay greater attention to managing financial products well as they navigate the next normal in the Malaysia economy."
Meanwhile, individuals aged 65 and older held their delinquency rate steady at 1.1 per cent over the last four years.
Experian said consumers might also be using their stimulus ringgit like those received from PEMULIH, i-Citra and other support under the National Recovery Plan (NRP) to pay down their bills and debt.
The bank loan moratorium extended till the end of 2021 has certainly helped, said Experian.
The fiscal discipline displayed by Malaysian households assisted in improving the average scores across all age groups in the last two years compared to 2018 and 2019.
Lai said the findings from Experian inaugural State of Credit 2021 Consumer Report showed that Malaysians were resilient, for the most part.
"They make smart decisions in the face of adversity, and they are agile in adjusting their financial habits when the environment or circumstances change," she said.
The report underlined that younger Malaysians might need greater financial assistance in refinancing and financial education as they demonstrate the greatest weakness in scores and payments.
"As we look forward to the year ahead, we need to ensure that critical safeguards around financial literacy are accelerated and deepened for the generation of the future.
"Here at Experian, our 'Know Money' financial literacy campaign continues to provide consumers with nuggets of financial advice and activities throughout the year to help Malaysians take control of their credit health and towards making better financial decisions for life," said Lai.
In conclusion, she said Experian foresees that consumers with relatively unaffected incomes will continue to shift their investment towards property purchases.
"Bank and lending institutions also look set with its continuation of collateralised consumer loans, as seen in increasing property loan approval rates," added Lai.