MBSB’s earnings weaker on higher provisions

  • Business
  • Thursday, 12 May 2016

KUALA LUMPUR: Malaysia Building Society Bhd (MBSB) has reported a lower net income of RM34.84mil for its first quarter ended March 31, 2016 compared with RM124.31mil a year ago on the back of higher allowances for impairments.

The financial services group’s revenue for the quarter amounted to RM812.63mil, an increase from RM690.6mil in the previous corresponding quarter.

It had set aside RM218.53mil as allowance for impairment losses, advances and financing, which is an increase from RM101.32mil a year ago.

Its earnings per share grew to 4.91 sen from 4.59 sen a year ago.

“The provisions were within expectations as part of its gradual impairments totalling RM1.6bil.

“Note that its balance sheet should strengthen in the coming quarters particularly with the recapitalisation exercise via rights issue being undertaken,” said an analyst of an independent research house.

The impairments were necessary to improve its loans ratios.

MBSB chief executive officer Datuk Ahmad Zaini Othman was recently quoted as saying that the group’s impairment programme had pushed its loan coverage ratio to 92% from 76% in 2014.

He added that by this year, MBSB’s loan coverage ratio would likely exceed 100%.

In its earnings disclosure to Bursa Malaysia, MBSB said that the higher allowances are related to impairment losses on loans, advances and financing. The group had initiated the impairment programme since the fourth quarter of 2014, it noted.

The group noted that its personal financing segment saw lower gross income during the period due to lower disbursements and decreasing portfolio base.

MBSB’s gross income from the corporate loans and financing was higher than previously due to continued asset base growth.

As for its mortgage loans and auto finance loans segments, MBSB said that the gross income derived were relatively consistent with the previous period.

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