by FARA AISYAH/ pic by RAZAK GHAZALI

MALAYSIA Building Society Bhd (MBSB) posted a RM12.51 million net loss in the second quarter ended June 30, 2020 (2Q20), due to a moratorium-driven RM512.61 million modification loss.

“It is a significant amount due to the sizeable portfolio contracted at fixed-rate financing,” MBSB president and CEO Datuk Seri Ahmad Zaini Othman (picture)  said in a statement yesterday.

“We hope to start seeing the unwinding of these modification losses sometime next year,” he added.

MBSB registered a loss per share of 0.19 sen in the three months, against 1.66 sen earnings per share in 2Q19 when it made a net profit of RM106.23 million.

Revenue for the quarter rose 17% year-on-year (YoY) to RM886.35 million largely due to gains from sales of financial investments in the period.

Loans fell 1.8% YoY to RM35.57 billion while deposits stood at RM33.99 billion, down 6.2% from RM36.23 billion in 1Q20.

Corporate and retail deposits fell as a result of the four Overnight Policy Rate (OPR) cuts this year, Ahmad Zaini said.

Gross impaired financing ratio fell to 6.08% in 2Q20 from 5.65% a year earlier, while net impaired financing ratio declined to 2.64% from 2.38% in 2Q19.

Allowance for impairment improved, with the group recording a RM53.87 million writeback on improvement in expected credit loss as a result of active collections to regularise payment arrears.

“For the banks, the situation shall remain challenging as we are confronted with a drop in OPR affecting profitability and the declining income level of customers potentially causing upside risks to non-performing financing,” Ahmad Zaini said.

Yet, he believes banks will be able to withstand the crisis due to their ample liquidity and capital strength. The Employees Provident Fund-controlled banking group’s share price closed unchanged at 54 sen yesterday, valuing it at RM3.77 billion.