MBSB's earnings triple in Q1 on write back on allowance for impairment losses

PETALING JAYA: Malaysia Building Society Bhd's (MBSB) net profit for the first quarter ended March 31, 2018 tripled to RM316.79 million from RM101.32 million a year ago partly due to the write back of RM154 million on the allowance for impairment losses of the financing assets.
MBSB group president and CEO Datuk Seri Ahmad Zaini Othman said the marked improvement is within its expectations following the completion of the impairment program in the last quarter of 2017.
"This follows the implementation of MFRS 9 effective January 1 of this year, hence indicating that we had actually undertaken a highly prudent impairment program," he siad in a statement.
Revenue rose marginally to RM815.04 million compared with RM811.20 million in the previous year's corresponding quarter.
MBSB's gross loans and financing grew 2.93% quarter-on-quarter by RM1 billion to RM35.20 billion, largely contributed by corporate and property financing. Its net impaired financing/loans ratio further improved to 1.82% from 2.11% (Q4 17) and 2.76% (Q1 17) resulting from the reduction in the net impaired financing loans together with the write back of the allowances on the financial assets’ impairment.
The group's cost-to-income ratio (CIR) regressed to 26.71% from 19.72% (1Q17), but the rise in costs had been expected due to the merger exercise as well as due to higher funding costs. Its CIR remains considerably better than the industry's average of 49.7%.
MBSB completed its acquisition of MBSB Bank Bhd, formerly known as Asian Finance Bank Bhd on Feb 7, 2018, making MBSB a financial holding company.
Over the next three years, MBSB will continue to maintain its conventional receivables and perform conversion of these receivables into Islamic receivables, which will subsequently bevested to MBSB Bank. Any residual receivables that are not converted will either be redeemed by the account holders or disposed to a third party.
"We continue to build up MBSB Bank's capabilities following the corporate exercise. We have realigned the group's business, policies and operations and continue to make investments to upgrade and enhance the information technology infrastructure and delivery channels."
As a new Islamic banking group in the industry, the group looks forward to expanding its products and services which include trade finance, wealth management and internet and mobile banking to cater to various segments of its customers and depositors.
At 2.40pm, MBSB's share price gained 7 sen or 6% to RM1.23 on some 10.59 million shares done.