The Sabah Development Bank (SDB) is showing signs of financial recovery as it intensifies efforts to resolve billions in non-performing loans, State Finance Minister Datuk Seri Masidi Manjun said.

Masidi said the bank has already made headway, with RM938 million worth of loan settlements approved by its board and over RM2 billion in collateral now placed under receivership for recovery action.

The overall target is to resolve RM3 billion in distressed loans over the next three years, he said.

“Sabah Development Bank is on a clear and structured path toward recovery,” Masidi said during his winding-up speech.

“This is a crucial part of our strategy to restore the bank’s financial health and credibility,” he said during his ministerial winding up speech on Wednesday.

SDB, a state-owned development financial institution, has faced scrutiny in recent years over the size of its bad debts.

However, Masidi said internal reforms have been put in place to address governance weaknesses and tighten credit controls.

These include enhanced risk management procedures, stronger internal oversight, and more stringent evaluation of loan applications moving forward.

While he did not disclose the identities of the bank’s major defaulters, Masidi confirmed that recovery efforts were ongoing, and legal avenues were being pursued where necessary.

He also reaffirmed the state government’s confidence in SDB’s ability to rebound.

“The bank plays a vital role in Sabah’s economic development.

“With these recovery mechanisms in motion, we are confident that SDB will emerge more resilient and better equipped to serve the state’s long-term growth agenda,” he said. –  April 16, 2025