MBSB profit fall 5.4% in 3Q on higher impairment, taxes but 9M up 8.9%

Business & Markets 2012
Written by Cindy Yeap of theedgemalaysia.com   
Monday, 05 November 2012 14:29

KUALA LUMPUR (Nov 5): Malaysia Buildings Society Bhd's (MBSB) net profit for the third quarter ended Sept 30, 2012 (3Q2012) fell 5.4% year-on-year (y-o-y) to RM89.98 million, despite the company making higher allowances for loan impairments and paying more tax, but its year-to-date earnings were higher on strong revenue growth.

In a statement today (Monday), MBSB said the 5.4% fall in its 3Q2012 net profit from RM95.08 million in the third quarter last year happened even as it took in RM22.28 million more taxes that was under-provided for in the previous year. The decline also came as allowances for impairment losses on loans rose to RM58.13 million from RM37.09 million while taxation in 3Q2012 more than doubled to of RM87.4 million from last year's RM35.03 million.

Nonetheless, higher income from growing Islamic finance business as well as higher net interest income from its conventional banking businesses helped revenue climb 53.1% to RM520.68 million in 3Q2012 from RM340 million the year before.

For the first nine months of 2012 (9M2012), net profit was up 8.9% to RM263.05 million from RM241.61 million on the back of a 45.7% year-on-year revenue growth to RM1.34 billion from RM922.3 million in the 9M2011.Impairment allowances was RM203.77 million in 9M2012 compared to RM127.86 million in the same period last year while taxation rose to RM145.77 million from RM84.94 million the year before.

In a statement accompanying the results release, MBSB president and CEO Datuk Ahmad Zaini Othman said the group's third quarter performance "is at record levels" helped by growth in its Islamic retail business with the offering of personal financing packages to government servants.

"This consumer segment remains a stable market with low repayment risks which justifies the provision of affordable financing to them," Ahmad Zaini said in the statement.

As at Sept 30, 2012, net loan, advances and financing stood at RM23.3 billion, up 52.6% from RM15.2 billion end-2011. Deposits stood at RM20 billion as at end-Sept 2012, up 48% from RM13.5 billion end-2011.

Ahmad Zaini also pointed out that MBSB's group non-performing loan (NPL) ratio stood at 4.33% as at Sept 30 this year, improving from 8.82% as at Dec 31, 2011, as it "resolved corporate legacy accounts".

"In addition to securitization of our loan assets, we are also looking at a structured capital management plan to strengthen the group capital structure to support loan assets' growth whilst we believe a stronger structure would enable the Group to provide competitive returns to its shareholders," he said in the statement.

Meanwhile, in notes accompanying its accounts, MBSB said: "The Group continues to give focus on fee-based income to further enhance profitability and to improve its loan assets quality… Barring any unforeseen circumstances, the Group expects to record satisfactory performance in 2012."

At midday, MBSB was down 2 sen or 0.86% to RM2.31 with 447,200 shares done.