KUCHING: Malaysia Building Society Bhd (MBSB) is well on track to sustaining its growth momentum while keeping asset quality intact, thanks to strategic measures taken by its management.
Elaborating this, OSK Research Sdn Bhd (OSK Research) stated, “MBSB’s sales year-to-date have been strong, with total gross disbursements of personal loan products hitting about RM2 billion. The company is confident it will reach its targeted disbursement of personal loans worth RM8 billion to RM9 billion for FY12 (financial year 2012).
“Management is targeting to reduce its net impaired loans ratio to 5.5 to 6.5 per cent due to a higher loan base and its efficiency in collecting defaulted loans. More importantly, we understand that the company will continue to recover its legacy loans by launching recovery programmes.”
The company’s fee-based income plunged 57 per cent year-on-year (y-o-y) and 6.7 per cent quarter-on-quarter (q-o-q) as it had been absorbing the stamp duty, insurance and migration costs as part of the promotion.
The research house gathered that the company’s fee-based income in 2Q12 (second quarter of 2012) would be similar to that in 1Q12 and would only normalise in 3Q12 with its current promotion transfer packages at the end this month.
The promotional transfer packages were aimed at acquiring new customers by enticing them to repackage their loans with MBSB, which helped to enhance cross-selling opportunities. To date, MBSB has roped in 60,000 to 70,000 customers via this programme.
“We gather that MBSB plans to securitise some RM4 billion of its receivables via a sukuk programme, slated to be completed by 3Q this year.
“Hence, it has adopted the Tawarruq concept for its new products, being a generally more acceptable concept compared to the Bai Al-Inah concept it previously adopted,” the research house opined.
To recap, MBSB had switched from the Bai Al-Inah to the Tawarruq concept in its personal financing business and signed a four-year licensing agreement with Sedania Corp’s unit IDOTTV Sdn Bhd to tap the MBSB’s Islamic banking platform to promote its personal financing-i scheme.
Via the Tawarruq trading system, the collaboration was expected to increase MBSB’s efficiency in corresponding with its customers as well as reduce its operating costs, OSK Research said.
In terms of expansion, MBSB was targeting to open five new branches and two new representative offices by end-FY12 and expected to beef up efficiency at all its branches once the first phase of its Core Banking System would kick off in September. The final phase would be launched in March or April next year.
OSK Research was brought to understand that the system would enhance the company’s operational efficiencies and allow it to cut down the turnaround time to process loan applications.
“MBSB also aims to capitalise on opportunities arising from various government initiatives such as the Economic Transformation Programme (ETP) and 10th Malaysian Plan.
“We think that the company will leverage these initiatives to grow its corporate loans, which made up only 19.6 per cent of its loan portfolio as at December 2011.
“We are maintaining our overall total loans growth of 24.5 per cent for FY12, which is above the company’s target loans growth of around 20 per cent for FY12.
“The company is also maintaining its net interest margin (NIM) target of four per cent for FY12, which is also ahead of our forecast.
“We continue to like MBSB’s diversification and innovativeness in growing its business moving forward,” OSK Research said while maintaining the fair value at RM2.70 per share, premised on 2.6 times price to book value.