MBSB posts modification loss of RM512m in 2Q

Its group president and chief executive officer Datuk Seri Ahmad Zaini Othman said "we hope to start seeing the unwinding of these modification losses sometime next year."

KUALA LUMPUR: Malaysia Building Society Bhd (MBSB) group recorded a modification loss of RM512.61mil for the second quarter ended June 30,2020 due to the moratorium granted to the customers.

Its group president and chief executive officer Datuk Seri Ahmad Zaini Othman “it is a significant amount due to the sizeable portfolio contracted at fixed rate financing”.

“However, we hope to start seeing the unwinding of these modification losses sometime next year, ” he said in a statement to Bursa Malaysia on Wednesday.

MBSB registered a net loss of RM12.51mil in 2Q20, an improvement of RM60.74mil or 82.92% from 1Q20 net loss of RM73.25mil, signalling a marked recovery from the previous quarter.

Its group revenue increased by 19.5% to RM886.35mil from RM741.41 million in 1Q20 which was largely due to gain from sale of financial investments in 2Q20.

“On a year-on-year (y-o-y) basis, revenue grew by 17.03% in 2Q20 compared to 2Q19.

“The group’s net income climbed to RM529.67mil which is 46.09% or RM167.10 million (q-o-q) increase from RM362.57mil in 1Q20.

“Net income is also higher compared to RM336.31mil that was registered for the same period last year following gains from sale of financial investments, ” it said.

On MBSB’s group deposits, Ahmad Zaini said corporate and retail deposit dipped as a result of the reduction in Overnight Policy Rate (OPR) four times this year.

MBSB group’s total deposit was at RM33.99bil, down by 6.18% decrease from 1Q20’s at RM36.23bil.

Cost to income ratio (CIR) stood at 19.72% in 2Q20, which is 10.56% lower (q-o-q) from 30.28% in 1Q20.

“This drop was due to lower expenses as the operation was affected during the Movement Control Order as well as higher net income for the current quarter, ” it said. Its CIR (y-o-y), fell by 11.60% from 31.32% in 2Q19.

Net profit margin rose marginally by 0.85% to 3.50% in 2Q20 compared to 2.65% in 1Q20.

Gross impaired financing (GIF) is recorded at 6.08%, a 0.57% (q-o-q) decline from 5.51% in 1Q20 and 0.43% (y-o-y) decline from 5.65% in 2Q19.

Net Impaired Financing stood at 2.64% in 2Q20, a decline of 0.32% (q-o-q) compared to 2.32% in 1Q20. The ratio declined (y-o-y) by 0.26% from 2.38% in 2Q19.

“The group’s allowance for impairment improved and recorded writeback of RM53.87mil in 2Q20. The writeback was due to improvement in expected credit loss (ECL) as a result of active collections to regularise payment arrears during the quarter.

“In 1Q20 and 2Q19, allowance for impairment recorded charges of RM291.78mil and RM92.42mil respectively, ” MBSB said.

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