Friday 29 Mar 2024
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KUALA LUMPUR (May 12): The proposed acquisition of Asian Finance Bank Bhd (AFB) by Malaysia Building Society Bhd (MBSB) is "looking good", said MBSB president Datuk Seri Ahmad Zaini Othman today.

Ahmad Zaini said the merger is likely to happen this time around.

"So far, we are talking. Nobody is backing out. From the discussion, it looks like they are still interested," he told reporters after MBSB's annual general meeting here today.

MBSB has completed due diligence on the proposed merger, he added. Bank Negara Malaysia has given until June 21 for the two parties to complete the negotiations.

The proposed acquisition of AFB is MBSB's third attempt to acquire an Islamic banking unit, which is in line with its goal to become an Islamic entity as opposed to its current status as a non-bank lender. Its two previous failed attempts to acquire Bank Mualamat Malaysia Bhd and the Islamic banking units of CIMB Group Holdings Bhd and RHB Capital Bhd were reportedly due to disagreement on pricing valuation. "Hopefully it's three-time lucky.

"This time it (AFB) is a smaller bank. The challenge is [that there are] four shareholders," Ahmad Zaini said. AFB's assets stood at RM2.62 billion as at Sept 2016, while MBSB was RM42 billion.

Meanwhile, Ahmad Zaini affirmed that MBSB remains focused to complete its impairment programme by this year, with a remainder of RM700 million. “We are okay because the business volume are there. Most of the impairment allowance came from our operating profit anyway."

“We are quite used to hard times,” he said. MBSB initiated the programme back in 4Q14 — with about RM2 billion allocated — as part of the plan to streamline operations in line with banking standards and practices.

“It is something of a necessity towards strengthening the company’s future direction. This year is the final year before MFR-9 kicks in in 2018.

“We need to conform to industry standard to achieve the banking status in the near future,” he said, adding that MBSB has completed 90% of the transition process to become achieve Islamic bank status by 2020.

Looking forward, MBSB is targeting a 6% to 7% loan growth this year, with an increased focused towards corporate financing particularly the small and medium enterprise (SME) segment.

It also targets to increase its corporate segment portfolio to 30% from 18% currently, but did not provide a specific timeline.

“Over the last two years we’ve started this [SME] business. We’ve booked in approvals of nearly RM800 million. For 2017 itself, we are targeting aggressive growth [in this segment],” said Ahmad Zaini.

Traditionally property-heavy in its corporate portfolio, Ahmad Zaini also pointed to MBSB’s shift from commercial to residential property financing — especially affordable housing, which he said “is selling like hot cakes”.

“There is a lot of talk that commercial [property] being oversupplied here, while there is a lot of demand for housing under RM400,000. We feel the risk management is better,” he said, adding that MBSB has approved PR1MA loans worth over RM1 billion in the past 12 months.
 

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