MBSB posts net loss of RM73.3m

The group’s deposit level stood at RM36.2b in 1Q20 compared to RM34.7b in 1Q19

by ASILA JALIL/ pic by MUHD AMIN NAHARUL

HIGH allowance impairment charges on loans, financing and advances due to an increase in Stage 2 and Stage 3 financing during the quarter led Malaysia Building Society Bhd (MBSB) to post a net loss of RM73.25 million in the first quarter ended Mar 31, 2020 (1Q20), versus a net profit of RM83.83 million a year ago.

In its Bursa Malaysia’s filing yesterday, the group said the net allowance for impairment charges for 1Q20 amounted to RM291.78 million.

However, higher fixed-income profit and gain from the sale of investment securities increased the group’s revenue by 2% year-on-year (YoY) to RM741.41 million in the current quarter compared to RM727.22 million in the same period last year backed by earnings per share at -1.09 sen in 1Q20 from 1.31 sen last year.

The group’s deposit level stood at RM36.23 billion in 1Q20 compared to RM34.7 billion in 1Q19, while its cost-to-income ratio continued to stay below the industry average of 44.7% at 30.28%.

Meanwhile, MBSB’s assets increased marginally YoY by 7.13% to RM50.81 billion from RM47.43 billion (1Q19) contributed by growth in financial investments.

Its net profit margin dropped to 2.65% in the current quarter from 3.01% in 1Q19, while net impaired financing increased to 2.32% in 1Q20 compared to 2.11% registered in the same period last year.

Group president and CEO Datuk Seri Ahmad Zaini Othman (picture) said the group aims to aggressively preserve the quality of the existing assets and increase its recovery efforts despite the difficulties faced during the quarter.

“We have identified the key risk areas that can impact future asset quality and have also immediately revised our key strategies to ensure there is sustainable revenue.

“Our technological advances continued with the launch of the first Shariah-compliant e-wallet in March, as well as the recent mobile banking application in May,” said Ahmad Zaini.

The group will also launch its Online Account Opening Service for both savings and current account for MBSB Bank Bhd’s retail customers in June. The bank made the transition to the Expected Credit Loss (ECL) model as prescribed by the Malaysian Financial Reporting Standards 9 (MFRS 9) effective Jan 1, 2018.

“The ECL model requires impairment allowances on all exposures from the time a loan is originated, based on the deterioration of credit risks which are indicated by Stages 1, 2 and 3. Stage 3 would result in the highest ECL charges,” it said in a statement.

It added that the model is in contrast to the incurred loss model under the previous MFRS 139 regime and based on the ECL model, MBSB’s two retail financing portfolios suffered from Stages 2 and 3 deteriorations due to legacy accounts.

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