KUALA LUMPUR: Malaysia Building Society Bhd (MBSB) is targeting up to 4.0 per cent loan growth this year and 2021, backed by its revised business plans that focus on civil servants and government contracts.
President and chief executive officer Datuk Seri Ahmad Zaini Othman believes trade finance for exports of certain commodities would remain strong but MBSB would be shying away from sensitive segments such as tourism.
"Traditionally, the areas of growth would be traditional products and services. For MBSB, we put more emphasis on personal financing and funding of such products," Ahmad Zaini said at MBSB's virtual press conference after its annual general meeting here today.
He said the treasury products and services and realisation of MBSB's investments would also supplement its income and profits in the coming months.
He said MBSB had incurred higher expected credit loss (ECL) in the first-quarter this year from the staging deterioration for loans and financing.
The group has identified customer engagement as one of the key measures for its return to profit in the next quarter. \
MBSB has also granted a six-month moratorium to eligible customers from April 1, in line with the Covid-19 pandemic relief measures by the government.
"However, at this stage I believe the bank may not be in the position to look at it (extending the moratorium) until we see the hard facts. Restructuring and rehabilitation are the common things for financial institution.
"During moratorium, there was a lot of mismatch on how we look at cash flow and accounting standard. The mismatch will result in modification loss and NCL (net credit loss). The modification loss is the main culprit whether to incur loss or reduction in profit," he said.
MBSB, he said, would continue to support customers and small medium enterprises based on merit.
The group has granted 266,000 customers with existing gross loans, advances and financing (LAF) balances worth over RM24.7 billion, representing about 70 per cent of its LAF.
The total collection from customers across the moratorium period stood at about RM1.5 billion.
"However during the moratorium, we encourage customers to regularise the instalment arrears, which will then improve our ECL and financial results for the coming quarters," he said.
Meanwhile, MBSB said it was looking into listing the banking group.
This could could be done after the group's structure was reorganised and all its conventional assets being converted and non-converted assets being disposed of.
Since April 2, MBSB has converted about 25 per cent or over RM659 million of conventional assets to Islamic assets.
"We expect to covert all our existing conventional assets to Islamic by 2021. Ast at March 2020, we have gross balance of RM1.84 billion of conventional loans.
"The conversion is an ongoing process. When Bank Negara Malaysia gave us the licence, they expect us to do the convergence within three years. So far we are on track, but I reckon under the current pandemic situation, we need to seek the central bank's indulgence," he said.
Ahmad Zaini said MBSB's outlook was dependent on the country's economic condition, amid fears of the second wave of Covid-19.
"Whether the industry can be able to sustain the second wave or the financial institution can provide the financial support - it hinges a lot on the second wave.
"We do not know what is going to happen in another couple of months as it is very difficult to predict," he added.