MBSB (1171) - MBSB’s profit soars on lower allowances for impairment losses

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KUALA LUMPUR: Malaysia Building Society Bhd

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(MBSB) boosted its net profit to RM100.74mil in the third quarter ended Sept 30, 2017, up 73.9% from a year earlier.

This improvement, achieved on 1.6% lower revenue of RM816.87mil, was mainly due to much lower allowances for impairment losses on loans, advances and financing (RM156.01mil versus RM209.98mil previously) and lower cost of funds.

The financial services provider told Bursa Malaysia that corporate loans and financing as well as property financing generated higher gross income compared to the corresponding period last year.

In contrast, personal and auto financing both contributed lower income due to lower disbursements and decreasing portfolio base.

The individual business segments’ performance for the quarter mirrored their performance over the first nine months of the year.

MBSB, which is majority owned (65.6%) by the Employees Provident Fund, said the group’s gross loans and financing grew by RM800.86mil, or 2.27%, to RM36.08bil as at Sept 30, 2017, compared with RM35.28bil as at Dec 31, 2016.

This was mainly driven by growth in corporate loans and financing, partially set off by contraction in the retail segment, it said.

Fair value of financial investments available-for-sale increased by RM678.90mil compared to its position as at Dec 31, 2016, due to improved yields from favourable market sentiments.

For the nine-month period, its net profit rose 88.2% to RM293.14mil on a marginally lower (-0.6%) revenue of RM2.44bil.

The better earnings were due to allowances for impairment losses on loans, advances and financing being lower by RM119.24mil and higher net operating income.

The group posted RM36.09bil in gross financing/loans and advances and total assets of RM44.95bil as at September 2017. Both showed year-to-date positive growths of 2.27% and 3.89% respectively.

Total deposits from customers also grew. MBSB had secured a total of RM33.14bil in deposits as at the third quarter of 2017 against RM31.46bil a year earlier and RM32.32bil in the second quarter of thus year.

MBSB president and chief executive officer Datuk Seri Ahmad Zaini Othman said he and his team were pleased with the group’s results in view of the hectic period for MBSB this year.

“We had utilised substantial time and efforts to ensure that the negotiation of the proposed merger with the Asian Finance Bank (AFB) would conclude favourably for both parties, while implementing our strategic business plans to achieve the key performance indicator. We’re indeed encouraged that we are on track to accomplish both objectives,” he said in a press statement.

On the group’s prospects, MBSB said it expected its performance for 2017 to be satisfactory.

It would focus on continued expansion of its corporate business segment that had shown positive contribution for the nine-month period in 2017, it said.



Regarding the proposed acquisition of 100% equity interest in AFB, MBSB said the group had started pre-integration activities to ensure smooth integration of operations after completing the proposed acquisition.

Ahmad Zaini said MBSB expected to conclude the share purchase agreement with the shareholders of AFB in the first quarter of 2018.

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