KUALA LUMPUR (Nov 20): Malaysia Building Society Bhd’s (MBSB) net profit expanded 39.5% to RM170.16 million for the third quarter ended Sept 30, 2019 (3QFY19) from RM121.96 million.

In a separate filing today, MBSB also announced that MBSB Bank is establishing a sukuk programme of up to RM10 billion in nominal value under the Shariah principle of Wakalah Bi Al-Istithmar for the issuance of Senior sukuk, Tier-2 sukuk wakalah and Additional Tier-1 capital sukuk wakalah.

MBSB noted the issuance of the said sukuk provides MBSB Bank with senior funding for its general banking purposes.

The big leap in the banking group’s net profit was mainly due to the reversal of overprovision of tax expenses.

MBSB also attributed the higher earnings to lower operating costs.

Earnings per share, accordingly, expanded to 2.63 sen from 1.97 sen. Quarterly revenue was up 3.5% to RM813.92 million, from RM786.41 million, according to a filing with Bursa Malaysia today.

Revenue is driven by its subsidiary MBSB Bank Bhd’s corporate financing income, treasury income and retail financing income.

Its net profit margin narrowed by 0.24 percentage points to 2.84% from 3.08% in 3QFY18, while its quarterly operating profit increased to RM265.72 million from RM231.42 million.

Nonetheless, the group’s return on equity (ROE), on the other hand, declined to 5.99% from 9.51% last year, while its return on assets (ROA) fell to 1% from 1.53%.

Cost to Income Ratio (CIR) improved to 26.7% from 27.66%.

For the cumulative nine months period, its net profit slid 31.3% to RM360.21 million or 5.58 sen per share from RM524.44 million or 8.58 sen per share last year. Revenue grew marginally by 0.84% to RM2.42 billion from RM2.4 billion.

Barring any unforeseen circumstances, the group’s prospects for the year are expected to be satisfactory, said MBSB.

The group continues focussing on expanding its corporate business, to reach the desired corporate retail portfolio mix, said MBSB.  

The current financing composition ratio between retail and corporate stood at 72:28. MBSB’s target is to be at 60:40 by next year, said MBSB.

“As a new Islamic banking group in the industry, the group is looking forward to expand its products and services which include trade finance, wealth management and internet and mobile banking to cater to various segments of customers and depositors,” said the group.

“MBSB Bank will continue to look for opportunities in the digital banking sector at the same time focusing our strength in the Small and Medium Enterprises (SME) segment,” said its group president and chief executive officer Datuk Seri Ahmad Zaini Othman, in a separate statement today.

He also said that the bank is progressing towards completing its three-year digital transformation plan, to be achieved before 2021.

Shares of MBSB closed unchanged at 85 sen today, valuing it at RM5.71 billion.