KUALA LUMPUR: MIDF Equities Research is upbeat on Malaysia Building Society Bhd
(MBSB) after its FY17 net profit of RM417.1mil were above expectations.
The research house said on Friday the results came in above itsand consensus expectation, accounting for 106.5% and 119.5% of full year estimates. Cumulatively, the group’s net earnings grew by a whopping +107.1% on-year.
MIDF Research pointed out the strong earnings growth was due to lower allowance for impairment losses on financing/loans and advances. It declined by 23.0% on-year for FY17, with 4QFY17 following the same pattern of previous quarters, decreasing by -35.2% on-year. On operational front, lower cost of funds has steered the net interest income higher.
The group’s cost-to-income ratio in 4QFY17 stood at 22.6%, showing marginal increase from corresponding period at 20.8%.
This was due to the necessary merger expenses and the expansion of business products and segments.
“Nonetheless, we opine the level as healthy, in comparison to industry’s average of 49.7%. Meanwhile, the group’s FY17 asset quality as measured by net impaired financing/loans (NIFL) improved by 0.76 percentage point on-year to 2.87%.
“MBSB has proposed a single-tier final dividend of 5 sen a share, which amounted to RM296.2mil. This implies a pay-out ratio of circa 70% of its FY17 earnings and a dividend yield of 4.3%.
“Despite the results came in above our expectations, we are maintaining our FY18 forecast as we have taken into account the reduction of impairment allowance as well as improving net income.
“We introduce our FY19 earnings forecast, which will reflect MBSB’s full year earnings projection as a full-fledged Islamic banking,” it said.
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