MBSB to focus on property financing

KUALA LUMPUR: Malaysia Building Society Bhd (MBSB) will focus mainly on property financing in the corporate lending segment as it targets to boost its corporate lending portfolio to 30% within one to two years, from 20% currently.

MBSB president and CEO Datuk Ahmad Zaini Othman said MBSB’s status as a non-financial institution limits its corporate lending abilities.

“The only thing that we can do well is property. It’s an area that we think is good. Secured lending, good margin ... why not? As long as we’re able to do it in the right location and with the right business partner, we should be okay,” Zaini told a press conference after the signing ceremony between MBSB and EcoFirst Consolidated Bhd’s wholly-owned subsidiary EcoFirst Hartz Sdn Bhd for loan facilities of RM189.95 million yesterday.

MBSB’s property financing portfolio stands at RM7 billion currently.

Zaini said the collaboration with EcoFirst marks the 18th property development project financed by MBSB in Selangor.

MBSB also provides financing facilities to property developers in Johor, Perak, Pahang, Penang and Sabah, exceeding a gross development value (GDV) of RM13.5 billion. These nationwide developments comprise residential properties, retail, commercial outlets and university campuses all over the country.

MBSB has also financed five projects in three states with an estimated amount of RM480 million for 1Malaysia People’s Housing Programme projects and five projects under 1Malaysia Housing  Projects for Civil Servants for about RM726 million.

Zaini said two years ago, MBSB started shifting its emphasis more to corporate lending and that property development was one of the areas for them to diversify its portfolio.

“We think 70:30 is the right mix for us to carry on those kind of risks and balance our income. We don’t want to be too heavy on retail or corporate.

“The way we want to do it is to beef up our corporate team, put in more resources in our corporate financing team. With this, we hope to bring in more corporate loans – property-based loans,” said Zaini.

MBSB will end its impairment programme by 2017, which started at the end of 2014, as part of an ongoing effort to streamline its business and operations to run like a financial institution.

Meanwhile, the financing secured by EcoFirst Hartz will be used for the purchase of land and development of its RM5 billion Ampang Ukay project.

The two components of the financing facility are an Islamic term financing facility (TF-i) of RM101.5 million to part-finance the purchase of 62ha of land in Ulu Klang, Selangor as part of the Ampang Ukay project, as well as an Islamic financing facility of RM88.45 million that consists of Islamic term financing of RM15 million, Islamic bridge financing of RM66.85 million and an Islamic financial guarantee of RM6.6 million.