ValueMax expects more unredeemed pledges, higher credit loss for moneylending business

PAWNBROKER ValueMax Group on Monday said it is not affected by government-mandated loan repayment or interest suspensions, as these are not mandatory for the firm, given that is is neither a member of the Association of Banks of Singapore nor the Finance House Association of Singapore.

Rather, its pawnbroking and moneylending businesses are regulated by the Registry of Pawnbrokers and the Registry of Moneylenders, respectively.

That said, with Singapore expecting to go into the worst recession since the Asian Financial Crisis, the group expects to see more unredeemed pledges and higher expected lifetime credit loss for its moneylending business.

It said that it will monitor its trade receivables closely and take necessary measures to minimise credit loss. Meanwhile, its principal bankers have been very supportive and the firm has been able to raise additional credit facilities during the challenging time.

These were in its published answers to "substantial and relevant questions" posed for its its June 24 annual general meeting.

As part of its efforts to support customers, ValueMax will also waive the first month's interest on all pledges pawned on or before April 6 upon redemption or renewal during or after the circuit-breaker period if the pawn period exceeds one month.

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In addition, any valid pawn ticket which expired during the circuit-breaker period will be automatically granted an extension until Aug 4, 2020, it said.

For its moneylending customers who require assistance, assessments are made on a case-by-case basis.

Asked if it is benefiting from rising gold prices, ValueMax said that currently, over 70 per cent of its inventory consists of gold or have some elements of gold.

However, although gold prices have risen during the year, there has been a decline in diamond prices, and part of the group's inventory consists of diamonds and diamond jewellery. Hence the group will need to assess for potential impairment in value and make the necessary write-downs for them during the financial year.

The group's retail operations have only just resumed with the start of Phase 2 of the easing of Covid-19 restrictions. Given the expected contraction in the Singapore economy and the rise in unemployment, its retail sales are expected to be negatively impacted, it said.