MBSB trims loan growth target

KUALA LUMPUR: Malaysia Building Society Bhd (MBSB) is trimming its loan growth target to between 15% and 20% this year amidst “domestic operating parameters”, said its CEO Datuk Ahmad Zaini Othman.

He said MBSB had set a higher target before. The company earlier set its loan growth target in the range of 20% to 25%.

Despite the downward revision, the company’s loan growth is still higher than the industry average of below 9% to 10%, said Zaini.

Zaini noted that MBSB would focus on personal finance, which will form a large bulk of its retail operation.

As at Dec 31, personal financing income was 49% of MBSB’s income portfolio.

With about 120,000 customers in its personal finance segment, this provides MBSB a 10% share of the personal finance market, according to Zaini.

According to an MIDF Research report dated March 28, MBSB has set a target of RM8 billion for personal financing-i (PF-i) for FY12, and during the first two months of the year, the group achieved close to RM2 billion, or 23% of this target.

As at end-2011, MBSB’s net loans, advances and financing stood at RM15.2 billion, an increase of 42% from RM10.7 billion the previous year, exceeding the banking industry’s average growth rate of 13.6%.

The group said in a statement that this growth was mainly due to the sales of its PF-i products to civil servants.

When asked if Bank Negara’s guidelines and the latest changes in the guidelines, which MBSB is not subjected to, would benefit the group in the long run, Zaini said the group “would benefit in the sense of flexibility”, but MBSB has “always observed the spirit of the guidelines” and been enforcing stringent lending practices.

According to the MIDF Research note, MBSB has implemented a credit scoring system, and approval of mortgage loans will need to go through a committee. These processes were put in place to strengthen its credit risk management.

In order to help MBSB achieve greater visibility and support its customer base, Zaini said the group is looking at opening a total of 45 branches this year.
Some of these branches, which include representative offices, will be in the same city.

For FY11, MBSB achieved revenue of RM1.27 billion, a 65.02% y-o-y increase from RM769 million a year ago. Its net profit more than doubled to RM325.43 million from RM146.03 million the year before.

The company expects the proceeds from the disposal of two plots of land in Johor and Sungai Buloh to be RM200 million. According to its latest annual report, the combined net value of the two plots of land is RM93 million.