MBSB returns to the black with a net profit of RM45.64 mln

KUCHING: Malaysia Building Society Bhd (MBSB) registered a net profit of RM45.64 million in the fourth quarter of 2016 (4Q16) as compared with a net loss of RM15.81 million recorded in 4Q15.

However, the financial institution in a filing to Bursa Malaysia yesterday noted that its 4Q16 revenue slipped marginally by 0.76 per cent y-o-y to RM819.40 million from RM825.69 million generated in 4Q15.

For financial year 2016 (FY16) ended December 2016, MBSB said revenue grew by 7.4 per cent y-oy to RM3.27 billion but earnings declined by 22 per cent y-o-y to RM201.41 million.

MBSB in a statement said the lower earnings for FY16 was due to the reversal of deferred tax assets.

It further noted the higher revenue generated for FY16 was contributed by the marked increase of approximately 25 per cent in financing disbursement from the corporate segment.

MBSB added the group’s financial performance was further supported by the growth in total assets, which rose to RM43.26 billion in 2016 from RM41.09 billion in 2015, an expansion of 5.30 per cent or RM2.17 billion.

The financial institution observed that the growth in total assets was attributed to the increase in net financing and loans as well as liquefiable assets

Meanwhile, MBSB’s president and chief executive officer (CEO) Datuk Seri Ahmad Zaini Othman said, “We are pleased with the results considering the challenging economic environment last year that has dampened market sentiments.

“For MBSB, it was tougher but in anticipation of such prospects, we had treaded the year with caution and great prudence ensuring we are able to maintain business momentum as well as sustain profitability level.

“I believe we have accomplished that,” he said.

Additionally, MBSB said the group’s gross loans, advances and financing grew to RM35.28 billion from RM34.11 billion, a marginal increase of 3.45 per cent or RM1.17 billion.

Ahmad Zaini added, “While we had strengthened market position in financing government contracts and projects especially the affordable housing, we are pleased to note that the new foray in small and medium enterprise (SME) segment continued to show promising results since the offer of equipment financing began two years ago.

“Revenue growth was fourfold from previous year, partly contributed by our new market presence in the northern and southern regions,” he said.

Apart from that, MBSB pointed out that retail financing assets remained the key contributor to revenue with an asset composition between retail and corporate at 81:19 for year 2016 as compared to 85:15 in 2015.

The financial institution noted the higher financing for the corporate sector was a progress towards the group’s target of 70:30.

Meanwhile, MBSB noted the group’s asset quality remained healthy with the net impaired financing or loans ratio declining to 2.87 per cent in 2016 from 2.99 per cent in 2015.

Furthermore, MBSB noted another positive indication also came from the financing or loans loss coverage ratio which had increased to 109.24 per cent from 92.23 per cent.

In strengthening its liquidity position, MBSB revealed that the group had boosted investments in liquefiable assets achieving growth of RM1.37 billion and as a result, contributing to the total income.

Moreover, the financial institution noted the group’s liquid assets stood at RM9.28 billion as at December 31, 2016, rising by 17.33 per cent as compared with RM7.90 billion for the previous year.

It explained that the increased investment was in tandem with the net proceeds received from a rights issue of RM1.7 billion completed in July 2016 which also increased the group’s leverage ratio to 14.38 per cent as at December 31, 2016.

To further support business expansion, MBSB disclosed that the group had also accomplished in raising deposit level from RM28.58 billion in 2015 to RM30.61 billion as at December 31, 2016.

On top of that, MBSB said the group continued to preserve a cost- efficient entity with a superior low cost to income ratio of 20.82 per cent for financial year 2016, a further improvement of 1.84 per cent from 22.66 per cent recorded on December 31, 2015.

It noted the ratio was well below the industry average of 49.5 per cent.

In relation to that, MBSB revealed that a branch rationalisation exercise was undertaken in 2016 where branches nationwide were assessed for their viability in order to reduce costs and increase staff productivity.

Overall, Ahmad Zaini said, “Our return on equity of 3.48 per cent is comparatively lower than that of key industry players.

“However, it is important to note that this was mainly brought down by the impairment programme.

“We shall conclude the program at the end of 2017 and hopefully then, we can anticipate marked improvements in our bottom line numbers. Besides, the Board of Directors has recommended a single-tier final dividend of three per cent or 3 sen per share for the financial year ended December 31, 2016 for shareholders’ approval.

“The dividend payout would be approximately RM174 million,” he said.

At the same time, Ahmad Zaini also gave some prospects for the year 2017 by adding, “The heightenedeconomicuncertainties and challenges leave us with no choice but to be resolute and optimistic.

“As it is, MBSB has developed and strengthened its capabilities in selected corporate segments that are well-linked and involved in the government projects, especially in the areas of education, infrastructure and now, the affordable housing.

“We are well supported by a qualified in-house technical team who monitors projects efficiently to identify and address project risks. Hence, MBSB hopes to benefit from the government’s efforts in continuing to roll out various construction and property projects to support the country’s economic growth,” he said.