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(i) Headline Key Performance Indicators for 2nd quarter 2008 (ii) Economic Profit and Loss Statement for 2nd Quarter 2008

BackAug 05, 2008
Malaysia Building Society Berhad ("MBSB" or "the Company") would like to announce the following:

(i) its achievement for the 2nd quarter 2008 as compared to the 2008 Headline Key Performance Indicators ("KPIs"); and

(ii) Economic profit and loss statement for 2nd quarter period ended 30 June 2008.
 
Announcement Details :

HEADLINE KPIs

On 14 June 2007, the Company had announced the Forward Looking Headline KPIs for 2007 to 2009. These KPIs have been set and agreed by the Board of Directors and Management of the Company as part of the broader KPI framework that the Company has in place, as prescribed under the Government Linked Company ("GLC") Transformation program and is disclosed on a voluntary basis.

It should be noted that these headline KPIs are targets or aspirations set by the Company for the respective years as a transparent performance practice. The KPIs should not be construed as estimates, forecasts or projections of the Company or representations of any future performance, occurrence or matter as the headlines are merely a set of targets or aspirations of future performance aligned to the Company's strategy.

MBSB'S ACHEIVEMENT TO HEADLINE KPIs FOR THE 2ND QUARTER 2008

The achievements of the Group (based on the unaudited financial results for the financial period ended 30 June 2008 announced on 5 August 2008) as compared to the Headline KPIs for 2008 are set out in Table 1.

The unaudited Group results for the six (6) months financial period ended 30 June 2008 have exceeded the Headline KPIs for return on equity and revenue growth for 2008 mainly due to increase in net interest income and improvement in loan recoveries followed by the Company's focus in managing the growth of retail loans.

ECONOMIC PROFIT AND LOSS STATEMENT FOR THE 2ND QUARTER 2008

Economic profit or loss is an amount earned for a period by a business after deducting the operating expenses and a charge of opportunity cost of capital employed. The economic profit and loss statement set out in Table 2 is disclosed on a voluntary basis.

The assumptions used in computing the economic profit/loss are set out below:

(i) The cost of equity is calculated based on the following formula:

Cost of equity = (Beta x Market Risk Premium) + Risk Free Rate

(ii) The Beta used in the calculation is the 5 years adjusted Bloomberg Rate:

Quarterly Period Beta
2nd Quarter 2008= 1.216
1st Quarter 2008= 1.303

(iii) The risk free rate is the rate of return of a 10-year Malaysian Government Securities at the closing of the reporting period:

Risk Free Rate
At 30 June 2008 4.770%
At 31 March 2008 3.792%

(iv) The market risk premium is assumed at 5.2%, which represents the market return in excess of the return earned on risk free asset.

TABLE 1
2008 Headline KPIs
2ndQtr 2008 6 months Unaudited Group results
1. Group net return on equity (maintaining a minimum return on equity of 7%)
7.5%
* 14.65%
2. Group revenue growth
15.0%
* 17.28%
3. Retail loans growth
25.0%
** 9.20%
* Annualised.

** Based on net retail loan balance at 30 June 2008 compared to balance at 31 December 2007.

TABLE 2
2ndQtr 2008 6 months (Unaudited) RM'000
1stQtr 2008 3 months (Unaudited) RM'000
Group profit after taxation
33,797
19,607
Less: Cost of capital employed
(27,423)
(12,930)
Economic profit
6,374
6,677