KUCHING: Malaysia Building Society Bhd (MBSB) recorded lower earnings in first quarter 2015 (1Q15) financial results despite generated higher revenue.
MBSB in a filing to Bursa Malaysia yesterday said earnings in 1Q15 decreased by 36.8 per cent year-on-year (y-o-y) to RM124.31 million.
Nonetheless, the financial institution said turnover in 1Q15 increased by 3.5 per cent y-o-y to RM690.6 million.
MBSB in its accounts notes accompanying the release of the company’s 1Q15 financial results said its profit before tax (PBT) in 1Q15 decreased by 41 per cent y-o-y to RM157.65 million due to higher allowances for impairment losses on loans, advances and financing and lower operating income on the back of higher revenue
The company explained that the higher allowances for impairment losses are in line with the group’s ongoing impairment programme under its strategy to align its policies with industry best practices and banking standards.
Meanwhile, MBSB in a press statement said its pre-tax profit for 1Q15 increased by 80.63 per cent quarter-on-quarter (q-o-q) to RM157.65 million.
The financial institution explained that the higher pre-tax profit was contributed by higher net income earned from its Islamic banking operations.
Commenting on the 1Q15 financial performance, MBSB president and chief executive officer (CEO) Datuk Ahmad Zaini Othman said, “The revenue performance shown in 1Q15 is partly due to the company’s substantial efforts in penetrating the corporate segment and this has resulted in a slight asset growth amidst a challenging retail banking environment,” he said.
Additionally, MBSB said due to the exceptional recognition of deferred tax assets made in the last quarter of 2014, the group showed a decline in net profit to RM124.31 million.
MBSB pointed out that the group has recognised RM366 million as deferred tax assets in 4Q14.
On a positive note, MBSB said the group’s net impaired financing ratio has trended downwards from 4.05 per cent as at Dec 31, 2014 to 3.98 per cent as at March 31,
The group noted that the positive development was due to the improvements in the quality assets as well as in the collection and the recoveries strategies.
Furthermore, MBSB has undertaken a second drawdown of its securitization programme with Cagamas Bhd amounting to RM500 million with a tenure of three years.
The drawdown was to further support and strengthen its liability management programme.
Moreover, the company noted that it recorded a cost to income ratio of 24.5 per cent, which remained below the industry average of 45.5 per cent.
Going forward, Ahmad Zaini said, “We are pleased that the implementation of the new five-year Business Plan 2015-2019 has shown some positive progress.
“The plan focuses on sustaining profitability and maintaining a return on equity (ROE) within the industry level.
“Barring unforseen circumstances, we remain optimistic that we are on track to achieve the desired targets,” he said.