MBSB in no hurry to get banking licence

KUALA LUMPUR: Malaysia Building Society Bhd (MBSB) has set itself the goal of functioning like a full-fledged bank but it is in no hurry to obtain a banking licence from Bank Negara Malaysia just yet, said president and CEO Datuk Ahmad Zaini Othman.

Speaking to reporters after launching MBSB’s first coffee table book yesterday, he said the company’s direction is to practise and perform like a bank at the moment.

“We can apply for the [banking] licence anytime,” he said, adding that the biggest issue now is to get ready to operate and migrate into the banking environment.

The non-bank lender sees no urgency in applying for a banking licence amid the implementation of the new financial services act (FSA), which is slated to come into force in the middle of this year.

“We can do so later. The authorities may still allow us to operate outside the act,” he said.

On the possibility of merging with RHB Capital Bhd (RHBCap), which shares a common major shareholder in the Employees Provident Fund (EPF), Zaini said it would depend on the shareholders.

Pointing out that MBSB could go in many directions, he said a merger with RHBCap could be one of the options.

“Or we can function as a stand-alone banking institution. From MBSB’s point of view, we want to work with a party that’s strong and friendly.”

Given that the EPF holds a 44.84% stake in RHBCap and 65.5% stake in MBSB, there has been speculation that a merger could eventually take place between both lenders.

Zaini said over the past four to five years, MBSB has been transforming itself into a bank-like institution.

MBSB currently provides personal and home loan financing to civil servants and private sector employees. It also offers bancassurance products and financing for property development projects and purchase of commercial properties.

The company’s main clients are civil servants, while its corporate clients remain largely government agencies and federal and state government-linked companies. Total deposits from corporate and retail clients stood at RM21.5 billion as at Dec 31 last year.

MBSB posted a net profit of RM166.14 million in the first quarter ended March 31 (1QFY13), an increase of 119.2% from RM79.42 million in 1QFY12. Its sterling performance was driven by the growth of the personal financing segment at its Islamic banking operations.

MBSB’s 1Q revenue rose 48.46% to RM562.48 million from RM378.88 million in the previous corresponding quarter.


This article first appeared in The Edge Financial Daily, on June 20, 2013.