Asean SMEs to invest more in tech to boost business

KUCHING: Small and medium enterprises (SMEs) in Singapore and the Asean region see the need to invest more in technology in order to succeed under increasingly challenging conditions. These are the findings of the Asean SME Transformation Study by United Overseas Bank (UOB), EY and Dun & Bradstreet. The study found that three in five […]

Kenanga slashes MBSB’s FY18 earnings forecast

PETALING JAYA: Kenanga Research has slashed Malaysia Building Society Bhd (MBSB) FY18 by 17% to RM481million despite registering a strong growth in FY17.

It said in a research note last Friday that the cut earnings forecast is in anticipation of a slower loans growth of about 3%, higher credit charge of 1.3% and lower return on equity (ROE) of less than 6%.

Nonetheless, Kenanga Research is maintaining an “outperform” call on MBSB due to undemanding valuations with a higher price target of RM1.35 after its FY17 earnings exceeded expectations. Its core net profit surged 107% year-on-year to RM417 million, which accounted for 125% of the research house’s full-year estimates and 113% of market estimates.

This stellar performance is attributable to lower impairment allowances, which were lower by 8%, and lower cost of funds at 0.41%.

The research house noted that despite improved earnings and top line growth of 5% on the back of stronger fund based income, MBSB’s loans declined by 3.1%.

While the group’s new Islamic banking entity is set to begin operations on March 30, 2018, its loans are expected to see sombre growth at around 3%-4%, which will be mainly driven by corporates and mortgages.

“Personal financing will still be the core of its loans/financing but likely to be selective on asset risk concerns. Moderate loans, higher operational expenditure (due to the new merged entity and digitisation) and higher-than-expected credit costs, management guided for a moderate ROE of less than 6%,” Kenanga said.

However, the research house noted that MBSB’s net interest margin will still be strong at about 3.4% with no material impact from the Overnight Policy Rate (OPR) hike as 99% of its deposits are fixed deposit-based.

MBSB’s earnings are expected to edge higher moving into FY19 at RM514 million supported by higher loan growth (+4%), lower credit charge (1.2%) and higher ROE (6.7%).

It added that the potential risk that MBSB is facing include higher-than-expected margin squeeze, lower-than-expected loans and deposits, and worse-than-expected deterioration in asset quality.

Last month, MBSB received its shareholders’ approval for the acquisition of Asian Finance Bank Bhd (AFB). It is on track for its asset & liability conversion, which is expected to be completed by March 2018.

In improving its asset quality, RM1.5 billion worth of non-performing loans will be disposed of. Some RM104 million worth of non-core assets has been disposed of since 2017 with the balance of RM109 million within three years’ time.

As of December 2017, MBSB has met the regulatory requirements with leverage ratio, liquid asset ratio and loan/financing-to-deposit base ratio at 14%, 32% and 92% respectively (against Bank Negara requirements of 12.5%, 25% and 100% respectively).

Consumer spending to hit US$632b in 2018, says Baker McKenzie

KUALA LUMPUR, Jan 30 ― Consumer transactions could reach US$632.6 billion this year, said Baker McKenzie in a recent report highlighting the sector’s potential to be a top performer for mergers and acquisitions (M&A) growth. In the Global…

The week at a glance 28 January 2018

Sabah & Sarawak Sarawak has a lot to offer in digital economy – Abg Johari Sarawak has a lot to offer in the digital economy such as content development by young talents, digitisation of the market through the Internet and distribution hubs as well as the hosting of server farms as a result of the […]

RHB partners Socso for online payment and collection

KUALA LUMPUR, Jan 21 — RHB Bank Bhd has signed a memorandum of understanding (MoU) with the Social Security Organisation (Socso) for online payment and collection through FPX (Financial Process Exchange) in conjunction with the three-day Kedah…

AmBank trims workforce, analysts bank on financial performance

KUCHING: AMMB Holdings Bhd (AmBank) is embarking on a mutual separation scheme (MSS) for a selection of its employees and analysts believe that this could lead to an improved financial performance. According to an email to staff on Monday, as sighted by The Edge Financial Daily, eligible, confirmed employees of AmBank Bhd, AmInvestment Bank Bhd, […]

Carrefour and Fnac Darty discussing purchasing alliance, says report

PARIS, Dec 1 — French retailers Carrefour and Fnac Darty are discussing an alliance to negotiate better terms when purchasing from electronics suppliers, French finance website BFM Business reported today. Carrefour declined to comment, but a…

RHB Bank pre-tax profit decreases to RM644.07 million

KUALA LUMPUR: RHB Bank Bhd’s pre-tax profit for the third quarter ended Sept 30, 2017 declined to RM644.07 million from RM662.62 million in the same quarter last year. Revenue fell to RM2.62 billion from RM2.65 billion previously, it said in a filing to Bursa Malaysia yesterday. RHB Bank said group retail banking, the biggest contributor, […]

RHB Bank pre-tax profit falls to RM644m

KUALA LUMPUR, Nov 27 – RHB Bank Bhd’s pre-tax profit for the third quarter ended Sept 30, 2017 declined to RM644.07 million from RM662.62 million in the same quarter last year. Revenue fell to RM2.62 billion from RM2.65 billion previously,…

Telekom 3Q pre-tax profit rises to RM235.51 million

KUALA LUMPUR: Telekom Malaysia Bhd’s (TM) pre-tax profit for the third quarter ended Sept 30, 2017 (Q3 2017) rose to RM235.51 million from RM218.87 million recorded in the corresponding quarter last year. Revenue increased to RM2.94 billion from RM2.92 billion previously. In a statement yesterday, TM said the group’s year-to-date (YTD) pre-tax profit slipped 8.4 […]