“We also want to maintain, if not improve, operating profits from our core business. In the present economic conditions, our strategy is to stay focused on core activities, be selective, and manage business risks,” he told StarBizWeek in an interview.
Personal financing, for instance, is relatively safe as MBSB’s loans are offered to civil servants.
“The level of NPLs (non-performing loans) in this segment is unlikely to rise given that civil employment is stable and loans repayment is auto-deducted from monthly salary,” Zaini said, adding that NPLs in the segment amounted to less than 1%.
The response to MBSB’s personal financing promotions is overwhelming, with the police force campaign now extended for the second month. “The last 30 days of campaigning has led to a bumper period for us that exceeded expectations,” he said.
The offer includes attractive rates, Takaful protection and holiday packages. MBSB’s target is to achieve RM100mil personal loans a month and RM1.2bil annually.
“At the present pace, personal financing should be able to book RM1.2bil to RM1.5bil annually. In the next two to three years, it will overtake mortgage in forming the bulk of net loans,” he added.
Zaini said the attractive rates were offered, as “we shouldn’t be reaping huge profits at the expense of the civil servants.”
MBSB recently launched its Musharakah Ventures Programme, which is an Islamic partnership model based on profit sharing to be implemented in property, contract and project financings.
The downside risk to Musharakah is mitigated by the high involvement of partners in ensuring the project’s success.
A project management and monitoring team has been established to access property development, projects and contracts that are viable for the Musharakah programme based on viability and the partner’s track record.
“The team comprises individuals from engineering, quality surveyor and technical background with banking exposure. They evaluate operational risks instead of credit risks that banks normally consider,” he said, adding that the minimum value of a project was RM10mil.
The programme is likely to contribute to part of this year’s targeted asset base growth of 15%. “We want to play safe first and tap our existing clients, who are mainly in property development. Government-related projects also have potential given the high certainty of cashflow and payment,” he said.
Contrary to perception, MBSB’s present involvement in financing property development is not the same as in the 1990s, when the group set up a property development subsidiary. The venture failed and it had to be rescued by its shareholder, the Employees Provident Fund.
That failed venture could be due to “relaxation in evaluation of projects and lopsidedness in contract terms,” Zaini said.
“We want to emphasise that we’re not setting up a property development business, as it is not our forte. Instead, we’re capitalising on the expertise of our clients and offering them financing while mitigating the risk by closely monitoring the project’s progress,” he added.
Zaini took office less than three months ago and in the short span of time, has introduced new policies, streamlined guidelines and concised the company’s standard operating procedures.
The business model at branches was changed and the position of regional business representative was created in the five regions nationwide.
“The representatives are responsible for the strategic planning of their respective regions. Given that some 50% of the business is from outside of Selangor and Kuala Lumpur, their role is to initiate and bring in new businesses,” Zaini said.
By The Star (By Yeow Pooi Ling)
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