KUALA LUMPUR, June 25 — Malaysia Building Society Bhd (MBSB) posted a net loss RM73.25 million in the first quarter ended March 31, 2020 (Q1 2020) compared with a net profit of RM83.83 million a year ago.

In a filing with Bursa Malaysia today, it said the loss was incurred due to its high net allowance for impairment charges on loans, financing and advances for the quarter, which amounted to RM291.78 million, following an increase in Stage 2 and Stage 3 financing in Q1 2020. 

Meanwhile, revenue improved to RM741.41 million against RM727.22 million in Q1 2019, due to higher fixed income profit and gains from sales of investment securities.

Banks made the transition to the Expected Credit Loss (ECL) model as prescribed by the Malaysian Financial Reporting Standards 9 (MFRS 9) effective January 1, 2018, it noted.

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The ECL model requires impairment allowances on all exposures from the time a loan is originated, based on the deterioration of credit risks which are indicated by Stages 1, 2 and 3. Stage 3 would result in the highest ECL charges.

This model is in contrast to the incurred loss model under the previous MFRS 139 regime.

Based on the ECL model, MBSB’s two retail financing portfolios also suffered from Stages 2 and 3 deteriorations due to legacy accounts.

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President and chief executive officer Datuk Seri Ahmad Zaini Othman said the operating environment would get tougher as the company navigates amidst the challenges that are presently emerging, but would continue to be resilient.

“We have identified the key risk areas that can impact future asset quality and have also immediately revised our key strategies to ensure there is sustainable revenue. Our technological advances continued with the launch of the first Shariah-compliant e-wallet in March, as well as the recent mobile banking application in May,” he said in a separate statement.

MBSB will also be launching its Online Account Opening service for savings and current account for its bank’s retail customers in June.

Correspondingly, MBSB Bank would also have an online application service for its personal financing products.

“We will be optimising the great potentials of technology by accelerating our efforts in rolling out online financing applications for retail customers, as well as providing greater convenience to Trade and SME Financing customers,” he added. — Bernama