Kenanga keeps 'outperform' call on MBSB (1171)

Kenanga Research expects Malaysia Building Society Bhd (MBSB) to see
good earnings growth in the second half of this year, led by a
substantial loan disbursement of RM7.2 billion and a healthy recovery
in its non-interest income with marginal net interest margin
compression.

In a statement today, Kenanga said MBSB has
nearly achieved its RM8 billion full-year loan disbursement target
within the first six months of the year.

"In addition, it still
has RM350 million undisbursed loan from the corporate segment, which
will further support its loan growth target in the upcoming quarter,"
it added.

Kenanga said the group's main strategy for the
remainder of the year is to build its assets by continuing profitable
programmes such as its hire-purchase loans, with the targeted potential
clients being from the Klang Valley areas.

It added its net
non-performing loan (NPL) ratio has improved from 7.3 per cent in the
first quarter of 2012 to 5.5 per cent in the second quarter of 2012.

"MBSB
is looking to further shave its net NPL ratio to 5.0 per cent this year
by refinancing two legacy loans as well as selling off some non-core
assets," it added.

Kenanga maintains an 'outperform' recommendation on MBSB with an unchanged target price of RM2.70. -- Bernama