MBSB’s net profit jumps 44.6%

This result is due to lower impairment provisions and higher operating profit in its 2Q


Malaysia Building Society Bhd (MBSB) posted a 44.6% increase in net profit, as lower impairment provisions and higher operating profit helped the non-bank lender to record a better than expected result.

Net profit for its second- quarter (2Q) ended June 30, 2017, rose to RM91.08 million compared to RM63.01 million posted a year ago — despite revenues being almost unchanged at RM813.42 million, compared to RM812.52 million recorded a year before.

Besides higher operating profit and lower impairment losses, improvement in gross income from corporate loans and financing helped to boost MBSB’s profit.

Corporate financing expansion also aided the lender, which is majority-owned by the Employees Provident Fund, despite a lower disbursement for the personal financing, property financing and auto financing segments.

In a statement yesterday, the non-bank financial institution said annualised return on equity for 2Q stood at 5.7%, while annualised return on assets stood at 0.87%.

Asset quality improved with a reduction in net impaired financing and loans ratio by 0.47% to 2.84% in 2Q versus the corresponding period last year.

Total assets recorded grew 3.72% to RM44.88 billion, mainly driven by higher gross financing/loans and liquefiable assets.

Total deposits grew by RM1.7 billion, or 5.58%, from end-December 2016 — helped by the jump in deposits from corporate clients.

MBSB’s liquid asset position as at 2Q expanded 11.45% from end-2016 to RM10.5 billion, while financing/loan loss coverage was maintained at 113.14% versus 113.3% on a quarter-on-quarter basis.

Its cost-to-income ratio improved to 21.41% in 2Q from 23.48% last year, attributed to higher total income of RM732.31 million during the quarter against RM669.43 million previously.

President and CEO Datuk Seri Ahmad Zaini Othman said the group will continue to focus on expanding its corporate segment through the development of special programmes for equipment financing.

It will also seek more effective approaches to increase fee income generation via wealth management and corporate advisory services.

The company last Friday announced that it had received approval from the finance minister, via Bank Negara Malaysia (BNM), for its proposed acquisition of Asian Finance Bank Bhd (AFB).

“We are grateful to BNM for granting us the approval. This is positive news much welcomed by all stakeholders — especially the share-holders and workforce at MBSB.

“Prior to this, we have actually established key plans and activities to ensure a smooth integration process, so now it’s time to get the ball rolling,” Ahmad Zaini said.

MBSB announced on June 19 that it had submitted an application to BNM for approval of a merger with AFB.

The two parties have been working on the proposal since receiving the central bank’s approval in December 2016 to commence negotiations with AFB shareholders.

MBSB’s share price rose two sen to close at RM1.29 at yesterday’s close.

Since early this year, the share price of the non-lender has increased 43.3%. Its share price is nearing its 52-week high of RM1.38.