The increase in profit is underpinned by the impairment write-down of RM211.7m in 4Q19

by PRIYA VASU/ pic by RAZAK GHAZALI

GROWTH in corporate and mortgage financing expanded Malaysia Building Society Bhd’s (MBSB) net profit by 202% to RM356.6 million for the fourth quarter ended Dec 31, 2019 (4Q19), from RM117.9 million recorded a year ago.

The increase in profit is underpinned by the impairment write-down of RM211.67 million in 4Q19, mainly due to refinement on the expected credit loss model for loans, financing and advances.

This brought earnings per share for the quarter at 5.44 sen from 1.88 sen previously, MBSB’s stock exchange filing last week showed.

Revenue for 4Q19 increased 15.3% to RM784.14 million from RM680.36 million a year ago, while revenue for the 12 months of 2019 (FY19) stood at RM3.01 billion, which is a marginal growth from FY18’s RM2.86 billion, driven by treasury income from financial investments.

In a separate filing to Bursa Malaysia, commenting on the performance results, group president and CEO Datuk Seri Ahmad Zaini Othman (picture) said: “We have executed various initiatives to better serve our products and services, and managed to gain traction. We remained resilient and held up well against the challenging economic environment.”

The group’s deposit showed positive growth by 9.45% to RM35.89 billion in FY19 compared to RM32.79 billion in FY18.

Financing loss coverage ratio was at 102.64%, while operating profit stood at RM1.01 billion, higher than FY18 which was RM970 million.

Meanwhile, net return on equity trended upwards year-on-year (YoY) by 0.14% to 8.76% in FY19 from 8.62% in FY18. Net return on assets increased by 0.07% to 1.49% in FY19 from 1.42% in FY18.

The group’s deposit showed positive growth by 9.45% to RM35.89 billion in FY19 compared to RM32.79 billion in FY18. Financing loss coverage ratio was at 102.64%.

Its net impaired loans, financing and advances saw an improvement of 0.05% YoY to 2.34% in FY19 compared to 2.39% in FY18, while MBSB’s gross impaired financing loans, financing and advances improved by 0.28% YoY to 5.19% in FY19 compared to 5.47% in FY18.

However, net profit margin regressed slightly to 2.89% in FY19 compared to 3.06% in FY18 following the Overnight Policy Rate cut.

In a related development, MBSB Bank Bhd issued a RM1.3 billion tier-2 sukuk wakalah on Dec 20, 2019. On this, Ahmad Zaini said: “This is done to strengthen our capital base.”

Corporate to retail financing asset composition was at 25:75 in December 2019, moving steadily towards MBSB Bank’s target of 30:70 by 2022.

In addressing the present economic challenges, Ahmad Zaini said: “We take cognisant of unfavourable factors currently affecting the economy, especially the Covid-19 virus and the political landscape.

“We have taken the necessary steps to manage these risks, as well as putting in place the initiatives to accommodate customers who are distressed by the negative impact of Covid-19,” he said.

MBSB Bank is also well on its way to achieve its three-year technology transformation plan and will launch its e-wallet soon.