KUALA LUMPUR (Feb 16): Malaysia Building Society Bhd (MBSB)'s net profit for the fourth quarter ended Dec 31, 2014 (4QFY14) rose 194 per cent to RM393.07 million from RM133.55 million mainly on deferred taxes amounting to RM366.06 million.
Quarterly revenue was RM594.33 million, 17.54% lower compared to RM720.74 million in 4QFY13, MBSB (fundamental: 1.2; valuation: 2.4) told Bursa Malaysia today.
Earnings per share (EPS) rose to 14.56 sen a share against 7.66 sen a share last year.
The group has proposed a total dividend of 12 sen a share comprising of a single-tier final dividend of 10 sen per share and special dividend of 2 sen per share for FY14.
The final dividend and special dividends are subject to shareholders' approval at the forthcoming 45th Annual General Meeting (AGM).
For the full year, MBSB's net profit climbed to RM1.02 billion, 70% higher versus RM597.57 million a year ago. Revenue expanded to RM2.61 billion, up 2.76% from RM2.54 billion last year.
EPS for the full year strengthened to 39.15 sen from 37.07 sen a share a year earlier.
In a statement to the local bourse, MBSB said it achieved an exceptional profit after tax of RM1 billion due to deferred tax recognition of RM366 million in the final quarter.
MBSB's president and CEO Datuk Ahmad Zaini Othman said, “The company had secured another set of sturdy results for financial year 2014 that had actually surpassed the RM1.1 billion mark in profit before tax and adjustments."
"Due to this exceptional performance, the Board had decided to accelerate the adoption of higher standards on the impairment of its financing assets. These impairments were mainly made for our mortgage financing portfolio," he added.
The group’s net Non Performing Loans (NPL) (3-months’ classification) ratio showed an improved 4.1% as at Dec 31 last year from 5.4% as at Dec 31, 2013.
Ahmad Zaini said this was another important progress as beginning January 2014, MBSB had already moved towards the industry’s NPL classification of three months in arrears from the previous six months in arrears.
“The Board intends to continue with the adoption of these higher standards over the next two years to close the gap in line with best banking practices,” he commented.
The net loan, advances and financing as at Dec 31 last year stood at RM31 billion or 2.43% higher compared to RM30.3 billion in FY13.
On this Ahmad Zaini said: “The group revenue remained to be contributed mainly by the retail financing portfolio but the expansion in corporate financing continued to provide us with the desired asset growth.”
Meanwhile, deposits fell 2.35% or RM661.8 million as at Dec 31 last year from the preceding 2013 level of RM28.2 billion. This was expected due to the heightened competitive rates towards the end of the year.
"Fundamentally, the group is in a strengthened financial footing with key financial ratios remaining amongst the best in the industry," he explained.
"Our cost-to-income ratio is at 22.4%, Return-on-Assets at 2.78% and Return-on-Equity at 29.56% while the industry average is at 46.8%, 1.20% and 13.80% respectively," he added.
Commenting on the mega bank merger which was fell through due to "unfavorable economic conditions", Ahmad Zaini said the management's time and efforts had substantially been spent on the merger negotiations, yet were able to stay on track to achieve the group's improved corporate results.
"We have always taken cognizant of the need to persist with the company’s business plans so as not to be derailed in the event of such outcome,” he added.
On prospects, Ahmad Zaini remained optimistic despite the forthcoming economic and industry challenges.
"MBSB had already begun implementing key plans to take advantage of certain sectors that are not heavily impacted by these economic changes.
"There are still a lot of potential untapped especially when we had recently started on new corporate financing facilities late last year.
"As for the retail market, customer retention strategy remained a major factor in retaining the existing retail portfolio. The industry can only expect a marginal growth this year unless we see significant improvements in the economic landscape," he said.
Shares of MBSB inched up 2.45 percent to RM2.24 on 2.49 million shares as at 2.43 pm.