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Extracted from Annual Report 2010

Dear Shareholders,

On behalf of the Board of Directors, it is my pleasure to present the Annual Report and Audited Financial Statements of Malaysia Building Society Berhad (MBSB) and its Group for the financial year ended 31 December 2010.

Overall Business Environment

It was a brighter year for the global economy overall and Malaysia experienced an economic growth of 7.2% for the year 2010. Concurrently, the local banking industry also saw a robust loan growth. On the back of all these favorable developments, MBSB registered another record profit for a second consecutive year.

Review of Group Financial Performance

The Group' performance improved significantly for the twelve (12) months ending 31 December, 2010, achieving a record pre-tax profit of RM207.4 million, an increase of 158% compared to the pre-tax profit of RM80.3 million for the previous year. This contributed to improved net earnings per share of 20.85 sen with a return on equity of 31% and bodes well for our current business strategies on retail products being undertaken to take MBSB to the Next Level.

Our key retail financial product, the Personal Financing-I ("PF-i"), has continued to be a major contributor to the Company's loan asset growth. All this could not have been achieved without the commitment, hard work and dedication of our staff as well as the continued support from our business associates. As at 31 December, 2010, net loans, advances and financing stood at RM10.7 billion, an increase of 32% compared to the same period in 2009.

Apart from the focus on expanding the personal financing sector, which resulted in an impressive growth, MBSB was also able to make inroads into certain market segments, especially on high net worth clientele in the mortgage market. Contract financing, introduced as a corporate business package in late 2009, allowed MBSB to secure financing for government contracts and those in the oil and gas sector. Deposits from customers stood at RM10.5 billion at 31 December 2010, an increase of 39% from the 31 December 2009 figure of RM7.6 billion. MBSB's ability to effectively control costs while improving efficiency and service turnaround time has led us to a very successful year.


Subject to the approval of the members at the Annual General Meeting to be held on 31 March 2011, the Board of Directors has recommended a first and final dividend of 9%, less 25% income tax, to be paid to depositors.

GLC Transformation Programme

As a Government-Linked Company ("GLC"), MBSB had been taking all the necessary steps to transform itself into a high-performing entity in line with the GLC Transformation Programme. Further efforts in this direction will continue this year.

For 2010, in managing and developing our human capital, MBSB continued to provide skills development and training programmes to all levels as outlined under the Orange Book. All the Board members had also completed a total of 241 hours training in 2010, an average of 30 hours per director. This is in line with the Green Book initiative to enhance the Board's effectiveness.

MBSB had also continued to enhance its operational improvements by carrying out several outsourcing exercises. In line with the Yellow Book initiative, these undertakings have benefitted MBSB in terms of reduced turnaround time, increase in productivity and a better customer service level.

Corporate Social Responsibility (CSR)

In strengthening its CSR programme as advocated in the Silver Book, MBSB had for the third consecutive year, promoted the Home Safety Campaign. The Company collaborated with various government entities, NGOs and TV stations in educating the public on fire prevention and first aid. Our CSR programme to our employees has been strengthened in the fields of education, career development, family welfare, health and safety. We have also supported the community at large by contributing to the underprivileged, orphanages, single mothers, the disabled and various flood relief centres.

Branch Network

The year 2010 also witnessed an increased reach to customers with the establishment of three Representative Offices (REP) in Kota Bharu, Kemaman and Dungun. Although not full-fledged branches, these REP act as sales channels for the Company's retail financial products. This innovative strategy has effectively extended the branch network and provided cost savings to the Company while allowing it to reap good financial returns. MBSB also opened a full-fledged Sales and Service Centre in Sibu, Sarawak during the year to meet the financial needs of customers in this thriving town. With Sibu, MBSB now has a total of seven branches in the East Malaysia region. MBSB has always believed in the economic and business potentials of this region and is positioning itself to participate more effectively in its growth opportunities.


The last two years have been very challenging and rewarding to MBSB as it pursued its mission "Taking MBSB to the Next Level". The continuing journey to the next level is expected to be equally challenging in view of a very competitive business environment. Nevertheless, we are confident that the future holds bright prospects for the growth and prosperity of the Company.


On behalf of the Company, I wish to express my utmost gratitude to MBSB's customers, partners and valued shareholders. The support extended to the Company has definitely enabled MBSB to achieve another great financial year and such confidence is very much appreciated.

My sincere thanks also goes to my colleagues on the Board and members of the Shariah Advisory Council for their insights, wisdom and guidance to help steer MBSB on a steady course.

YBhg Tan Sri Abdul Halim bin Ali
14 February 2011