MBSB earnings down 67%

  • Business
  • Saturday, 14 Nov 2015

But revenue up 13% as loan growth accelerated in third quarter

PETALING JAYA: MALAYSIA BUILDING SOCIETY BHD (MBSB), the lender seeking a merger with Bank Muamalat Malaysia Bhd, registered a 67% drop in net profit to RM63.5mil in the third quarter (Q3) ended Sept 30 on higher impairment charges.

Revenue climbed 13% to RM768mil as loan growth accelerated.

“We will continue with our business growth plans and operational improvements moving into year 2016 as these will only bring value to the new entity,” its president and chief executive officer Datuk Ahmad Zaini Othman said in a statement yesterday.

The group’s net impaired financing ratio stood at 3.2% as at end of September compared with 3.9% recorded in the preceding second-quarter 2015.

It also reflects significant improvement of 1.8% as compared to 5% recorded in September 2014.

“We will continue with the impairment programme to ensure the group’s reporting standards are in the direction of the industry,” he said.

The group’s corporate segment demonstrated greater momentum with its contribution of 14.1% from the total gross loan and financing as at Sept 30 as compared to 10.9% during the same period in 2014.

But the sharp drop in profits in the third quarter means MBSB had missed its own annualised group net return on equity (ROE).

The company, in a separate statement to Bursa Malaysia, said the annualised net ROE was 7.6% for the nine months ended Sept 30, 2015 compared with the target 2015 headline key performance indicators (KPI) of 12.5%.

“However, the annualised group net ROE did not meet the target set mainly due to lower operating profit as a result of higher impairment losses on loans, advances and financing,” it said.

MBSB said its annualised group revenue growth for Q3 met the targeted headline KPI mainly due to higher income from investments and higher financing income from corporate segments.

It said the target headline KPIs for 2015 were set and agreed by the board of directors and management as part of the broader KPI framework that the company has in place.

This was prescribed under the government-linked company transformation programme and was disclosed on a voluntary basis.

MBSB also said these headline KPIs were targets or aspirations set by the company for the respective years as a transparent performance practice.

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