/// Banking and Investment News
MBSB Taps Into Plantation, Property and O&G
Sectors
children to learn more about
savings and support children’s
activities in shopping malls in
the Klang Valley.
Palm Oil Industry Cluster, Lahad Datu
Malaysia Building Society Bhd (MBSB)
is expanding its financing business to
include contract financing for plantation,
property as well as oil and gas projects
to sustain its revenue and earnings
growth.
The company’s chief executive officer
Datuk Ahmad Zaini Othman believed
that the shift towards more corporate
businesses will propel the company
to diversify its assets base – which
are currently concentrated in the
retail segment, focusing on personal
financing.
“For our corporate business, we are
looking into palm oil plantation financing
and industrial hire purchase. We will
also increase our concentration on
project and contract financing for the oil
and gas sector.
In the meantime, he said
MBSB is targeting corporate
loan growth of 15% to 20%
this year in line with previous
years estimate. For the
present business model,
he noted that most of its
products are being sold on
fixed rate basis and most of the financial
institution’s customers are public sector
employees, thus translating into good
margin for the financial institution.
On another note, he said the company’s
personal financing’s business has not
been severely impacted by the new
ruling on lending by the central bank.
Although he observed that there was a
slight decrease in its personal financing
portfolio growth, Ahmad Zaini believes
that it was just a ‘knee-jerk’ reaction and
it is still early to gauge the impact on its
personal financing business.
“We need a couple of months to study
the impact of our personal financing
business. We are still looking at what is
the comfortable level of our personal
financing portfolio,” Ahmad Zaini said.
“For our new business, our commercial
and Bumiputera Development Division
has been established to provide
financing to the small and medium
enterprises (SMEs) and Bumi companies
which is below RM20 million.
He pointed out that its existing financing
business continued to enjoy growth
adding that its earnings for the nine
months ended September 2013 has
surpassed that of September 2012.
“For our wholesale banking, we will
focus on new areas such as healthcare
and infrastructure financing,” he told
reporters at the Spotlight on Malaysia
event organised by Bursa Malaysia.
At the same time, he said one of the
challenges that MBSB is facing, is the
ability to meet the expectations for
its shareholders, customers as well
as providing the reasonable amount
of return and yet still be able to grow
consistently.
He revealed that the company is also
going to enhance its retail business
which include introducing new wealth
management products and new
business model for instance, training
up its workforce as individual financial
advisors.
Ahmad Zaini said that MBSB is targeting
to open nine personal financing express
kiosk this year from six and setting up
new auto finance hubs in the northern
and southern regions of Peninsular
Malaysia.
Additionally, Ahmad Zaini said MBSB is
aiming to open 13 new branches this
year and set up niche branches known
as “Kids’ Fun” branch to enable young
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He explained that the non-bank financial
institution will also look into providing
more fee-based income services to
enhance the turnover of the company.
He noted that the company will also
be lean in its operations and maintain
the right level of cost to income ratio to
further sustain its earnings growth.
Other challenges which he foresees in
the company’s business are compliance
with the regulatory framework and to
have greater capital requirements to
preserve and add more value to the
company.
New Rate Framework to Spur Stiff
Bank Competition
The new reference rate
framework proposed by Bank
Negara to replace the base
lending rate will spur stiff
competition in the banking
industry, AmBank Group
chairman Tan Sri Azman
Hashim said today.
“Competition will get stiffer
as customers will be exposed
to more transparent pricing,”
he told a media briefing
after handing over a multipurpose vehicle by the
diversified banking group as its
contribution to the Malaysian
Islamic Women’s Welfare
Council.
Also present was the Tunku
Ampuan of Negeri Sembilan,
Tuanku Ampuan Najihah, who
is also the council’s president.
The new reference rate as
proposed by the central bank
via an industry consultative
paper to the financial industry
on Jan 16 will be determined
by the respective financial
institution’s funding cost.
Under the proposal, every
financial institution should
have a specific funding
structure and strategies,
and its compliance with
the statutory reserve
requirements will be reflected
in the pricing.
Other pricing components
such as borrower credit
risk, liquidity risk premiums,
operating costs and profit
margins are also proposed by
Bank Negara to be reflected
in the spread to the reference
rate.
The current base lending rate
minus will be replaced with a
new style of reference rate,
plus a spread. Therefore,
the basis for introducing the
reference rate will be simply
to eliminate negative spreads
to the reference rate, going
forwa &B