MBSB says it is on right track to be a full-fledged bank

by **Cals** Wed 23 Apr 2014, 22:24

Business & Markets 2014

Written by Adela Megan & Levina Lim of theedgemalaysia.com

Wednesday, 23 April 2014 10:19

KUALA LUMPUR: Malaysia Building Society Bhd (MBSB), which has made known its intention to be a full-fledged bank, has achieved 80% of best industry practices and Bank Negara Malaysia (BNM) guidelines, according to chief financial officer Tang Yow Sai.

“We will achieve the remaining 20% in the next one to two years as we still have to comply with [standard procedures] such as documentation and implementation,” he told reporters after the company’s annual general meeting (AGM) yesterday.

He said being fully compliant with industry best practices and BNM guidelines does not mean that MBSB will be a full-fledged bank by then, as such a move will still require shareholder approval.

President and chief executive officer Datuk Ahmad Zaini Othman said MBSB is capable of being a standalone bank without any mergers and acquisitions if its shareholders are willing to put in capital and grow the company.

He said MBSB can be a stand-
alone full-fledged bank as it is already quite “clean and lean”, noting that a banking licence is needed if the company wants to operate as a full-fledged bank.

On the impact of BNM’s responsible lending guidelines on personal financing, Ahmad Zaini said MBSB, like other banks in the country, has experienced it.

“Personal financing in the retail business has reduced by more than 80% [in loan disbursements], but that is substituted by other types of financing. I think it will remain that way for the whole industry. But bear in mind that we have addressed this, it’s not something that is shocking to us. We have taken all kinds of proactive measures to counter it by way of looking at other revenue streams.”

He said MBSB is developing its other business segments and has started diversifying its strategy over the last three years to include corporate and wholesale banking businesses.

“We are targeting a 10% to 12% increase in revenue this year. It will not come from the retail segment, but will be driven by the corporate side — contract financing, oil and gas, as well as property development.

“Most of these come from the corporate side. In terms of the trajectory, I think we will do better this year compared with last year,” Ahmad Zaini said.

For the financial year ended Dec 31, 2013 (FY13), MBSB posted a revenue of RM2.51 billion and pre-tax profit of RM932.35 million.

On its oil palm plantation financing scheme, Ahmad Zaini said MBSB is making progress in the programme.

At the AGM, shareholders approved the payment of a single-tier final dividend of 5%, or RM131.1 million, for FY13.

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Ahmad Zaini (left) and Tang after the company’s annual general meeting yesterday.

This article first appeared in The Edge Financial Daily, on April 23, 2014.