MBSB shares jump on possible wage increase for civil servants

PETALING JAYA: The rally in Malaysia Building Society Bhd (MBSB) shares could be due to its potential to be the beneficiary of a possible increase in civil servant salaries and an anticipation of mortgage tightening measures.

MBSB's share price jumped 18 sen or 14% to RM1.47 while its warrants soared 15.5 sen or 33% to 62.5 sen yesterday.

A source familiar with the matter told StarBiz that MBSB could benefit from the possible increase in civil servant pay rise anticipated in the upcoming Budget 2012.

“The pay rise will increase the amount of disposable income of civil servants that may prompt them to refinance some of their loans with MBSB.

“And the expected curb in mortgage lending would also put MBSB at an advantage as it not regulated by Bank Negara,” he said.

Apart from that, the source said MBSB was also a fundamentally sound company which expected to post another strong quarterly result.

MBSB is an exempt finance company, a status granted by the Finance Ministry on March 1, 1972, which allows it to carry on a finance business without a licence.

Established as a building society to provide mortgage loans, MBSB has since balanced its portfolio by not only providing mortgages, but is also now a major non-bank provider of consumer financing, especially to civil servants.

Both the shares and warrants were the top two most actively traded counters, with 43.4 million shares and 50.2 million warrants changing hands yesterday.

But some quarters of the market still speculated that something was “brewing” at MBSB in terms of corporate developments, especially concerning the Employees Provident Fund's 65.5% stake in the company. But, according to EPF, it had not made any decisions to divest its stake in MBSB. “The EPF is comfortable with the present performance of MBSB and looks forward to continuing improvements in their financial results,” an EPF spokesman said.

After EPF, the second largest shareholder of MBSB is Permodalan Nasional Bhd, with a 11.9% stake.

In its second quarter results ended June 30, MBSB posted a 58% increase in net profit to RM78.2mil from a year ago due to higher income from Islamic banking operations and conventional business net interest income. Revenue for the quarter under review jumped to RM318.6mil from RM176.1mil last year. For the six-month period, MBSB's net profit reached RM146.5mil from RM92.7mil while revenue climbed to RM630.2mil from RM345.2mil a year ago.