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MBSB targets 3-4% loan growth this year, focuses on civil servants

30 Jun 2020 / 20:10 H.

PETALING JAYA: Malaysia Building Society Bhd (MBSB) is looking at a loan growth of between 3% and 4% for FY20 ending Dec 31, with a focus on civil servants, under its revised business plan, as it views the segment to be quite stable.

Apart from that segment, the group believes trade finance in areas of export for certain commodities would still continue to be strong. It will be shying away from sensitive segments such as tourism.

“Traditionally, the areas of growth would be traditional products and services that we see out there in the market, but for MBSB, we are really putting more emphasis on the personal financing and bundling of such products,” said president and CEO Datuk Seri Ahmad Zaini Othman.

For the first quarter of this year, the group posted a net loss of RM73.25 million, due to an increase in expected credit loss (ECL) as a result of staging deterioration for loans and financing as at end of March 2020. However, he noted that its treasury activities remain active and are expected to increase their income contribution in the current year.

As with other lenders in the country, MBSB granted a six-month moratorium to eligible customers on April 1, 2020, in line with the Covid-19 pandemic relief measures initiated by the government.

Ahmad Zaini said MBSB encourages customers to regularise instalment arrears during the moratorium, which will improve its ECL and financial results in the coming quarters.

He added that MBSB has identified customer engagement as one of the key measures for its return to profitability in the next quarter.

Further down the line, MBSB’s plan to list its wholly owned unit MBSB Bank is on track and will be done once it has transferred the converted assets to the bank and disposed of any non-converted assets. The bank is expected to convert all its existing conventional assets to Islamic assets by 2021.

“With this we hope that MBSB Bank will have better market penetration, liquidity to risk equity in a more wholesome way and engage with all the investors locally and internationally that are looking for shariah compliant shares,” said Ahmad Zaini.

Asked about the possibility of a merger, he said the group is not exploring the option at the moment.

“In fact, we have revised our business plans to fit the challenges of the prevailing economic conditions. We need to be lean and focused to ensure the entity survives.”

With regard to MBSB’s outlook for the remainder of the year, Ahmad Zaini said that this depends on whether there will be a second wave of Covid-19 outbreak.

“Should a second wave occur, the question is whether industries are able to sustain that second wave and whether financial institutions are able to provide continued support,” he said.

The CEO cautioned that as the United States is still seeing a high rate of Covid-19 infections, it might spill over and create a worldwide situation once again. “If the situation is not stabilised the industries would be more vulnerable. This would have a chain reaction that would cause distress throughout the financial system, which would result in people losing jobs and income and impact consumer sentiment,.”

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