MBSB eyes 3-4pc loan growth this year

MBSB Bank CEO Datuk Seri Ahmad Zaini Othman said the bank would target government servants in its push. — Picture by Choo Choy May
MBSB Bank CEO Datuk Seri Ahmad Zaini Othman said the bank would target government servants in its push. — Picture by Choo Choy May

KUALA LUMPUR, June 30 — Malaysia Building Society Bhd (MBSB) says it is targeting a 3-4 per cent loan growth for the financial year ending Dec 31, 2020 under its revised business plan and strategy.

Group president and chief executive officer Datuk Seri Ahmad Zaini Othman said the bank would target government servants as well as government projects and contracts as it believes the segment is quite stable.

“We also believe trade finance in export for certain commodities would still continue to be strong.

“Traditionally, the areas of growth where we put more emphasis are personal financing and funding, and product bundling of these products,” he told reporters during a video conference after the annual general meeting here today.

He said the focus would also be on Treasury products and services and the realisation of the group’s substantial investments to supplement their income and profits in the coming months.

Ahmad Zaini said MBSB was in a loss-making position for the first quarter this year due to the increase in expected credit loss (ECL) as a result of deterioration in staging of loans and financing as at end-March 2020.

MBSB had granted a six-month moratorium to eligible customers since April this year, he said, but noted that during the moratorium period customers are encouraged to regularise the installment arrears which will then improve the group’s ECL and financial results for the coming quarters.

“Our Treasury activities also remain active and are expected to increase their income contribution in the current year,” he said.

On suggestions to extend the six-month moratorium, he said the bank is not in a position to look at it yet until it sees hard facts.

“During the moratorium, there has been a lot of mismatch on how we look at cash flow and accounting standards, and the mismatch would result in modification loss and NCL,” he said, noting that modification loss (from the moratorium) is the main determinant of the financial institutions’ performances.

He noted that for the first moratorium, MBSB had granted more than 200,000 eligible customers with existing loans and advances amounting to over RM5 billion, representing about 14 per cent of the group’s gross loans, advances and financing with the total collection from customers across the moratorium period at about RM1.5 billion. 

On plans to get MBSB Bank listed, he said this could be done after the structure is reorganised and all the converted assets are transferred to the bank and any remaining non-converted assets disposed of.

“We have completed about 12 phases of conversion with a value of over RM659 million or about 25 per cent. We expect to covert all our existing conventional assets to Islamic assets by 2021.

“As at March 31, 2020, we have a gross balance of RM1.84 billion or net balance of RM1.08 billion of conventional loans.

“The conversion is an ongoing process. When Bank Negara Malaysia gave us the licence, they expected us to do the convergence within three years. So far we are on track, but I reckon under the present pandemic situation, we need to seek the central bank’s indulgence,” he said.

Moving forward, Ahmad Zaini said the outlook remains challenging with the economy and market’s greatest fears being the second wave of the COVID-19 pandemic, whether industries would be able to sustain, and whether the financial institutions would be able to provide continued support.

“As it stands now, it looks okay but we do not know what is going to happen in another couple of months.  It is very difficult to predict and difficult to focus in the areas where it is so blurry

“We have to monitor and make sure to embrace the new norms and changes. Meanwhile, the global sentiment is not there, not only from a virus point of view but also the ongoing US-China trade war.

“We also have to be mindful of our political situation being able to provide the stability,” he added. — Bernama

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