{
  "id": 15675795,
  "title": "MBSB's transformation faces profitability test",
  "url": "https://urgent.news/2026/10/20/mbsbs-transformation-faces-profitability-test",
  "topic": "world",
  "section": "World",
  "published": "2026-10-20T00:00:24.000Z",
  "source": {
    "name": "New Straits Times",
    "slug": "new-straits-times",
    "url": "https://www.nst.com.my/business/corporate/2026/10/1559394/mbsbs-transformation-faces-profitability-test"
  },
  "original_language": "en",
  "account": "KUALA LUMPUR: Over seven decades after its inception as a building society aiding civil servants in home ownership, MBSB Bhd has transformed into a diversified financial services group. However, translating this metamorphosis into stronger and more sustainable earnings continues to pose a challenge. Chairman Datuk Wan Kamaruzaman Wan Ahmad admitted that legacy financing issues, integration hurdles, and intense competition persist in affecting the group's profitability despite advances in its funding position and the growth of its financial services. He emphasized that the group is unlikely to meet certain targets this year, particularly on profitability. Wan Kamaruzaman, who took the helm in January 2024, stressed the importance of ensuring growth does not compromise asset quality. He reiterated that shareholders have backed the management's cautious approach to capital deployment rather than aggressive financing expansion to boost short-term profits. The largest shareholder is the Employees Provident Fund (EPF) with a 56.55 percent stake, followed by Permodalan Nasional Bhd (PNB) at 12.56 percent, according to Bursa Malaysia data. Despite these obstacles, MBSB has made strides in several areas under its three-year FLIGHT26 transformation plan from 2024 to 2026. The strategy aims to bolster its funding base, expand financing, boost non-funded income, and enhance operating efficiency. The group's Casa ratio rose from roughly six percent in 2023 to 15.5 percent by the end of 2025. Its cost of funds also decreased from 3.7 percent in 2024 to 3.4 percent in 2025. Although MBSB has succeeded in reducing its cost of funds, Chairman Wan Kamaruzaman cautioned that aggressive deposit pricing by competing banks could undo some of these gains. He stated that funding costs below 3.5 percent are comfortable for the group, yet some banks offer rates around four percent for corporate deposits, which could push MBSB's funding costs above its preferred level. Non-funded income increased by 76 percent to RM280 million in 2025, illustrating the diversification of income sources beyond financing activities. However, these improvements have not yet resulted in stronger overall profitability. MBSB's net profit declined by 31.3 percent to RM279.5 million in 2025 from RM406.8 million the previous year. In the six months up to June 30, 2026, its net profit fell 58.7 percent to RM74.36 million from RM180.24 million a year earlier. The cost-to-income ratio stood at 65.5 percent as of June 30, compared to 65.8 percent in the previous period. This is below FLIGHT26's 50 percent target for the end of 2026. MBSB's legacy financing challenges stem partly from its transition from a housing financier to a personal and business financing institution. Originally established in 1950 to aid civil servants in purchasing homes, the institution later diversified into personal financing and lending to small and medium enterprises (SMEs). Personal loans became the largest segment of MBSB's lending portfolio. However, some older personal financing facilities carried tenures of up to 25 years, creating a disparity between borrowers' remaining working years and repayment obligations. MBSB faced this issue when Bank Negara Malaysia introduced measures in July 2013 capping personal financing tenures at 10 years to curb excessive household debt. Despite this, the mismatch contributed to non-performing loans that continue to impact the group's asset quality.",
  "summary": "KUALA LUMPUR: More than seven decades after it began as a building society helping civil servants own homes, MBSB Bhd has evolved into a diversified financial services group.",
  "key_points": [
    "MBSB transformed into diversified financial services group over 70 years",
    "Chairman admits profitability challenges persist despite funding growth",
    "Group unlikely to meet profitability targets this year"
  ],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}