MBSB reports RM45.6mil in Q4 net profit

Company nets RM46mil on higher financing income

PETALING JAYA: Malaysia Building Society Bhd (MBSB) reported a net profit of RM45.64mil for its fourth quarter ended Dec 31, 2016 (Q4’16), thanks to higher financing income from the corporate segment.

This was a considerable improvement over the corresponding period a year ago when it reported a RM15.8mil net loss. MBSB’s revenue for Q4’16 and Q4’15 was at RM819.4mil and RM825.69mil, respectively.

The group’s cumulative net profit for financial year 2016 (FY16) amounted to RM201.41mil on the back of RM3.28bil in revenue. In comparison, MBSB reported a net profit of RM257.59mil and revenue of RM3.05bil for FY15.

In a filing with the exchange yesterday, MBSB disclosed that the year-on-year (y-o-y) rise in revenue was mainly attributed to higher financing income from the corporate segment and higher contributions from investments in liquid assets. Its cost-to-income ratio also improved on a y-o-y basis to 20.8%.

As for the decreased y-o-y net profit, this was mainly due to higher allowances for impairment losses on loans, advances and financing with the continuation of its impairment programme which was initiated back in 2014.

Last year, MBSB group chief executive officer Datuk Ahmad Zaini Othman (pic) remarked that without the ongoing impairments made on a quarterly basis, the group would have recorded more than RM1bil in extra pre-tax profit. Analysts had previously estimated that by the end of the two-year exercise, total impairments made are expected to amount to around RM1.9bil.

On the other hand, MBSB noted that it had reported lower allowances for impairment for Q4’16.

Additionally, the group reported a lower gross income from the personal financing, mortgage loans and auto finance segments. MBSB attributed the decline to lower disbursements and a decreasing portfolio base.

On its outlook going forward, MBSB said it would focus on the continued expansion of the corporate financing segment, as it has shown positive contribution in 2016 in terms of growth in portfolio assets and earnings.

“The group will continue to strengthen, adapt and sustain its corporate and retail business activities, including collection efforts to compete in a challenging environment. These activities include continued improvement in compliant operational workflows, efficient workflows, and enhancing asset quality based on risk management and credit frameworks,” it said.

In a separate filing, the group said it had declared a single-tier final dividend of three sen per share for the year, which translates into a total payout of approximately RM173.96mil.

Shares in MBSB gained buying interest recently, as the group is currently in the midst of discussions with Asian Finance Bank Bhd (AFB) for a potential merger exercise. Since the beginning of the year, the group’s shares have risen by around 15%.

A merger with AFB would be a boon for MBSB, which has long sought a commercial banking licence which, among other things, would give it cheaper access to capital as well as allow it to take current and savings accounts deposits.

The stock closed at RM1.15 yesterday, a one-sen increase from the previous day’s close.