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Thursday, February 25, 2016

MBSB slips into the red on impairment loss provisions

KUALA LUMPUR: Malaysia Building Society Bhd (MBSB) suffered a net loss of RM15.81mil in the fourth quarter ended Dec 31, 2015, compared with a net profit of RM393.07mil in the previous corresponding period, mainly due to allowances for higher impairment losses.

Revenue for the quarter under review grew 39% to RM825.69mil from RM594.33mil a year earlier.

For the financial year ended Dec 31, 2015 (FY15), net profit plunged to RM257.59mil from RM1.02bil in the previous corresponding period, while revenue rose to RM3.05bil from RM2.61bil a year earlier.

MBSB said in a stock exchange filing that the decrease in the net profit was mainly due to higher allowances for impairment losses on loans, advances and financing with the continuation of the impairment programme initiated by the company in the fourth quarter of 2014.

“In 2015, the impairment programme contributed 75% of the total allowance for impairment losses.”

The company embarked on a “Closing the Gaps” exercise from 2010 to bridge its frameworks so as to be in line with banking standards and best practices.

The impairment programme, which is in line with the recommendation by Bank Negara, is in addition to the existing impairment provision that is in compliance with current accounting standards.

“The impairment programme will end in 2017 with an estimated average credit cost of 2% for each year based on gross loans/financing of RM34bil as at Dec 31, 2015.”

MBSB also proposed a single-tier final dividend of 3%, amounting to RM85.16mil, for FY15.

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