MBSB Bank To Focus On Compliance, CTI Ratio Set To Rise

MBSB Bank To Focus On Compliance, CTI Ratio Set To Rise -  MBSB Bank Bhd, the renamed entity that will be parked under Malaysia Building Society Bhd

 (MBSB) following the latter’s acquisition of Asian Finance Bank, will strongly focus on adhering to compliance following the merger.

“One of the priorities that we are going to put in place is to instil a very strong compliance culture within the bank itself to adopt Bank Negara’s rulings and so on.

“This will be a top priority,” MBSB Bank president and chief executive officer Datuk Seri Ahmad Zaini Othman told a press conference after the launch of its merged brandname and logo here yesterday.

This would see its cost-to-income ratio (CTI) rise following the completion of the merger.

“People are saying that the CTI would definitely increase with this new banking platform. It will increase but it is how we measure productivity levels against a set of costs. For this year alone, the CTI will not breach 30%,” Ahmad Zaini said.

Its CTI was at 22% to 23% just after the merger, which was the “best in the industry.”

In terms of profitability, he said that last year saw MBSB making about RM500mil in pre-tax profits and this year this figure will be “more substantial than this”.

“I hope it will be better than last year. But there are many more elements to it, and since we are a public-listed company, it would be quite difficult for me to give such projections. We should be announcing our first-quarter results for the newly merged entity soon, so you can (make) projections from that,” he said.

He also said there was no need to raise additional capital for now.

New areas for business opportunities for the bank are the working capital type of financial facilities and it would also provide syariah-compliant products and services in consumer and business banking, he said.

On loan growth, Ahmad Zaini said the merged entity’s loan growth is projected to be at 4%-5%, but noted that the focus would not be on this area per se.

“It is more of building up fee-based capabilities and transactional banking. I think this is where we want to chart our growth. For many years, we did not have the banking licence, so we had not been able to do a lot of things under the banking platforms,” he said.

“Now we have got the licence, and should be exploring doing more things that we are able to do under this banking platform. This is the way forward for the new bank. The way we look at banking is not about lending, but more of transactions on how we can manage the collection accounts of our customers and embark on our digital journey,” he added.

He stressed that banking in MBSB Bank would not follow the traditional banking scene with physical brick-and-mortar branches, but more of transforming the entity into its digital journey employing a lot more technology.

In its statement, the bank said it would focus on developing its fintech capabilities to attract more customers.

On the bank’s key performance indicators (KPIs) following the merger, Ahmad Zaini said there were three sets of KPIs that have been formulated, of which 30% of its management are responsible for.

“We approached this in a different way on the basis of a shared KPI with all senior management, where 30% of them are responsible for profitability, CTI ratios and customer service. This are the quantitative areas.

“The qualitative ones are areas such as compliance and so on. This is a more different approach to KPIs. We want to ensure greater teamwork, more cross-selling of products and services,” he said.