KUALA LUMPUR (May 26): Malaysia Building Society Bhd’s (MBSB) net profit in its first quarter ended March 31, 2022 (1QFY22) fell 8.2% to RM58.21 million from RM63.41 million a year ago, on the back of lower non-funded income and higher operating expenditure.

The higher operating expenditure was in relation to technology and personnel-related expenses, MBSB said in a Thursday (May 26) statement.

Consequently, the group’s quarterly earnings per share declined to 3.25 sen, from 3.64 sen in 1QFY21.

Nevertheless, net income rose 7.4% to RM229.2 million from RM213.38 million, on the back of lower impairment charges and modification loss.

Net income from Islamic operations rose 2.97% to RM392.32 million, from RM381 million.

The group’s impairment charge dropped by RM16.7 million or 9.5% to RM158.3 million, from RM174.99 million, MBSB said.

Modification loss was at RM8.96 million, down 75.4% from RM36.46 million, under the Financial Management and Resilience (URUS) repayment assistance programme.

Operating expenses rose 46.9% year-on-year to RM150 million, which contributed to higher cost-to-income ratio of 37.83%, MBSB said.

In 1QFY22, revenue was lower by 2.4% y-o-y to RM664.5 million from RM680.98 million, contributed by lower non-funded income mainly due to losses incurred in the sale of Treasury investments.

 “The group also recorded a higher gross impaired ratio of 5.89% compared to 4.60% in the preceding quarter, mainly arising from the expiry of the repayment assistance and impairment of several corporate financing facilities,” MBSB said.

It expects gross impaired financing to normalize in subsequent quarters, with efforts underway to restructure and recover the financing, it added.

In a statement, MBSB acting chief executive officer Datuk Nor Azam M Taib said the group is reaffirming its strategies to grow MBSB’s business in order to meet its current business plan to provide sustainable Islamic financing to customers.

Although gross financing only grew by 0.7% during the 1st quarter, MBSB is set to see higher growth in the coming quarters, as some of these financing facilities are at various stages of disbursements, Nor Azam said.

Commenting on the recent hike to the Overnight Policy Rate (OPR) by 25 basis points to 2%, Nor Azam said the group “expects some margin compression as a result of the OPR increase” and it aims to address this by managing its funding costs.

MBSB has launched its e-KYC (digital customer identity verification) solution, which will start with an integration with its existing CASA-I account opening platform, to be followed by Personal Financing-I and e-Wallet, the group said.

MBSB share price rose half a sen or 0.81% to settle at 62.5 sen on Thursday, giving it a market capitalisation of RM4.48 billion.