Highlight MBSB's 3Q net profit declines 67% on impairment losses

by **Cals** Sun 15 Nov 2015, 02:04

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[size=28]MBSB's 3Q net profit declines 67% on impairment losses

By Sangeetha Amarthalingam / theedgemarkets.com | November 13, 2015 : 7:29 PM MYT

KUALA LUMPUR (Nov 13): Malaysia Building Society Bhd ([You must be registered and logged in to see this image.] Valuation: 2.55, Fundamental: 1.20)'s (MBSB) net profit plummeted 67% to RM63.53 million or 2.24 sen a share for its third quarter ended Sept 30, 2015 (3QFY15) from RM192.37 million or 7.19 sen a share a year ago, mainly due to higher allowances for impairment losses on loans, advances and financing with the continuation of its impairment programme initiated in the fourth quarter of 2014.

Revenue for 3QFY15 rose 13.1% to RM768.03 million from RM679.99 million in 3QFY14.

The group's net impaired financing ratio stood at 3.2% as at Sept 30 compared with 3.9% as at June 30.

"The impairment programme, collection recovery strategies and individual assessment of accounts being implemented in December 2014 are contributing factors to the improvement," said MBSB president and chief executive officer Datuk Ahmad Zaini Othman in a statement today.

"Hence, we will continue with the impairment programme to ensure the group's reporting standards are in the direction of the industry's," he added.

The Group's total assets of RM41.1 billion as at Sept 30 grew by 9% from RM37.7 billion as at Dec 31, 2014. Loan growth shows an upward trend of 0.3% at RM31.7 billion in 3QFY15 from RM31.6 billion in 2QFY15.

For the nine-month period (9MFY15), MBSB saw its net profit drop 56% to RM273.4 million or 9.87 sen a share from RM621.96 million or 24.33 sen a share a year ago.

Revenue for 9MFY15, however, grew 10.2% to RM2.22 billion from RM2.02 billion in 9MFY14, mainly due to higher income from investments of liquid assets and higher financing income from corporate segment.

The group's cost to income ratio for 9MFY15 has also remained relatively consistent with the previous year corresponding period's to stand at 23%.

Going forward, the group expects a satisfactory performance in 2015.

On the planned corporate merger between Bank Muamalat and MBSB, Ahmad Zaini said: "We will continue with our business growth plans and operational improvements moving into 2016 as these will only bring value to the new entity."

MBSB shares closed unchanged at RM1.69 today, bringing a market capitalisation of RM4.8 billion.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)
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