MBSB will step up efforts to become full-fledged bank

KUALA LUMPUR: Malaysia Building Society Bhd (MBSB), which is not hung up on getting a banking licence at the moment, will however ramp up efforts to become a full-fledged financial institution (FI) through the implementation of its 2016 Business Plan.
President and CEO Datuk Ahmad Zaini Othman said MBSB is not even looking at applying for a banking licence at this stage.
"Over the last 24 months, we've involved ourselves in corporate exercises, the failed mergers with CIMB-RHB and Bank Muamalat, all with the intention of putting MBSB onto a banking platform.
"Since these corporate exercises did not take off, we've continued to close the gap (towards becoming a bank), continue to put in processes, policies so that when we do embark on an application or another corporate exercise, we're ready to become a bank," he told a press conference after MBSB's AGM and EGM here yesterday.
Zaini said there are four components to put MBSB closer to a banking platform – capital, corporate governance, operations and credit.
"If we're able to solve or tackle these four components, we're definitely on the road to a better platform that what we are currently experiencing and if any corporate exercise is to come our way, we will be a lot more ready than before."
MBSB's 2016 Business Plan centres on six areas, namely, business focus, right pricing, asset quality, cost cutting, retail collection and information technology initiatives.
"The thrust of the business plan for 2016 and beyond is having to comply with prudential requirements as recommended by the central bank, which is important to us," Zaini said, adding that MBSB is in a situation where it has to move forward without a banking licence.
He said despite the failed mergers, MBSB continues to be open to opportunities and will look at all possibilities.
Zaini said the impairment programme which it began at the end of 2014 reflects its commitment to meet the industry's impairment standards and can further assist the group in closing the gap. Its loan loss coverage ratio has improved to 92% in 2015 from 77% in 2014.
"By 2016 we think we're able to achieve above 100% loan loss coverage ratio. From the industry angle, this is what FI is all about -- able to absorb and manage losses. We will continue to do this impairment over the next two years to 2017 and by then this ratio will be beyond 100%," said Zaini.
He added that 2016 will see the conversion of its conventional assets into Islamic solutions, as MBSB gear towards becoming an Islamic FI.