The origins of Malaysia Building Society Bhd (MBSB) can be traced back to the Federal and Colonial Building Society Ltd, incorporated in 1950. In 1956, it changed its name to Malaya Borneo Building Society Ltd (MBBS), with the Malayan government as its major shareholder. MBBS was then listed on the Stock Exchange of Malaysia and Singapore in 1963.
MBSB was incorporated in 1970 to take over the Malaysian operations and was listed on the then Kuala Lumpur Stock Exchange in 1972. MBSB is a scheduled institution as defined under the Banking and Financial Institution Act 1989 (Bafia). It was granted exempt finance company status in 1972 by the finance ministry and the status has remained in force since.
Employees Provident Fund Board and Permodalan Nasional Bhd are two major shareholders of MBSB. As a financial provider, MBSB offers a spectrum of innovative financial products and services for both individuals and corporates throughout its branches nationwide.
CEO Datuk Ahmad Zaini Othman shares with The Edge Financial Daily his strategies and dreams for the company, and the transformation he has led MBSB through since taking over the helm in early 2009.
TEFD: What are the company’s competitive strengths and advantages?
Zaini: MBSB is an exempt finance company granted by the finance ministry on March 1, 1972. This allows MBSB to undertake a financing business in the absence of a banking licence. As a result of this, it is not subjected to Bafia and is limited in its ability to provide a comprehensive range of financial products and services in comparison to its licensed peers.
Nevertheless, it does possess certain strengths and advantages to continue providing promising returns to its shareholders.
MBSB has an established position in the market as a financial provider that is preferred by the government servants. As a small financial institution, we have great flexibility and agility in product development and the decision-making process.
What have been the major achievements of the company in the past four years?
We have achieved record profitability for two consecutive years, with pre-tax profit of RM80.3 million in 2009 and RM207.4 million in 2010.
(Editor’s note: MBSB has since chalked up pre-tax profit of RM327.1 million for the nine months to Sept 30, 2011).
As far as non-financial achievements are concerned, MBSB is the only financial institution with a network of representative offices (REP) compared to conventional full-fledged branches which require higher capital expenditure. Our first REP was set up in 2010.
MBSB is also the only financial institution to possess qualified project experts such as engineers, property valuers and quantity surveyors. They are housed under the project management and monitoring department, which has also been ISO 9001:2008 certified.
In terms of corporate governance, we were ranked 34th under the Malaysian Corporate Governance Index 2010
What are the major challenges your company faced over the years and how did it overcome them? Is there anything else you would have done differently?
As a non-bank financial institution, we have several challenges. These include effectively competing with existing market players that are superior in terms of funding costs, asset size, branch network and infrastructure. We are also constrained in our ability to extend our reach to customers due to a limited branch network.
Due to our new business direction, we need the talent and skills required to execute new business initiatives. We are also constrained by the inability to provide trade facilities for corporate clientele. Lastly, there are also various misconceptions of the company due to past issues and legacy problems.
How do we resolve these challenges?
We revived the personal financing product for government servants to establish and cement market positioning as a preferred financial provider for the government servants. This provides MBSB with a niche market to serve and avoid direct competition with existing market players.
We established REP to only promote and sell retail financial products. This network is less costly to set up and maintain compared with a full-fledged branch, and is able to provide high returns.
We have outsourced the sale of retail financial products to qualified agents nationwide, which provides a greater reach to customers. New talents and skills have been hired from within the industry with attractive remuneration packages. More importantly, we offer them a better career growth due to their position as pioneers in the company.
MBSB is leveraging on other financial institutions for the provision of trade facilities, resulting in fee income opportunities and the ability to become a one-stop financial solution centre.
In the past, MBSB had been media-shy, leading to misconceptions not being corrected. Hence, in the last two years, improvement in the company’s image was achieved through the execution of fresh marketing campaigns on products to increase brand awareness and continuous meetings with analysts.
How is the company positioning itself within your industry? What are your strategies to grow or gain market share?
The company is positioning itself as a key financial provider to the government servants and to the corporate clientele who has been awarded government projects. It shall continue to pursue market share in personal financing through product development and new campaigns, while continuing to work with the government and its agencies in securing financing of their awarded projects.
What are your company’s plans for the future, short-term and long-term?
In the short term, we want to grow our retail assets critically via the personal financing and home mortgage products, and establish our position as a reliable financial provider in the corporate segment. In the long term, we want MBSB to become a respectable industry player with a strong financial position while serving its niche market.
What are your plans to compete in the increasingly globalised environment?
The company shall continue to capitalise on its strengths as a small financial institution in comparison to its peers to compete in a highly competitive environment. These include the agility in decision-making process and personalised customer service, especially for corporate clients. We will leverage on outsourcing to operate efficiently with a fast turnaround time. The company will avoid direct competition with the existing financial players.
What is your dream for your company? How would you like to see it in 10 years?
The company aims to achieve pre-tax profit of RM500 million and be known as a strong financial institution. In early 2009, we established the “Taking MBSB to the Next Level” programme to achieve this profit target. Record profits that were achieved for the last two consecutive years were based on this mission and the long-term business plan being put in place will assist the company in achieving that target.
This article appeared in The Edge Financial Daily, December 6, 2011.
MBSB was incorporated in 1970 to take over the Malaysian operations and was listed on the then Kuala Lumpur Stock Exchange in 1972. MBSB is a scheduled institution as defined under the Banking and Financial Institution Act 1989 (Bafia). It was granted exempt finance company status in 1972 by the finance ministry and the status has remained in force since.
Employees Provident Fund Board and Permodalan Nasional Bhd are two major shareholders of MBSB. As a financial provider, MBSB offers a spectrum of innovative financial products and services for both individuals and corporates throughout its branches nationwide.
CEO Datuk Ahmad Zaini Othman shares with The Edge Financial Daily his strategies and dreams for the company, and the transformation he has led MBSB through since taking over the helm in early 2009.
TEFD: What are the company’s competitive strengths and advantages?
Zaini: MBSB is an exempt finance company granted by the finance ministry on March 1, 1972. This allows MBSB to undertake a financing business in the absence of a banking licence. As a result of this, it is not subjected to Bafia and is limited in its ability to provide a comprehensive range of financial products and services in comparison to its licensed peers.
Nevertheless, it does possess certain strengths and advantages to continue providing promising returns to its shareholders.
MBSB has an established position in the market as a financial provider that is preferred by the government servants. As a small financial institution, we have great flexibility and agility in product development and the decision-making process.
Zaini: The company shall continue to capitalise on its strengths as a small financial institution.
What have been the major achievements of the company in the past four years?
We have achieved record profitability for two consecutive years, with pre-tax profit of RM80.3 million in 2009 and RM207.4 million in 2010.
(Editor’s note: MBSB has since chalked up pre-tax profit of RM327.1 million for the nine months to Sept 30, 2011).
As far as non-financial achievements are concerned, MBSB is the only financial institution with a network of representative offices (REP) compared to conventional full-fledged branches which require higher capital expenditure. Our first REP was set up in 2010.
MBSB is also the only financial institution to possess qualified project experts such as engineers, property valuers and quantity surveyors. They are housed under the project management and monitoring department, which has also been ISO 9001:2008 certified.
In terms of corporate governance, we were ranked 34th under the Malaysian Corporate Governance Index 2010
What are the major challenges your company faced over the years and how did it overcome them? Is there anything else you would have done differently?
As a non-bank financial institution, we have several challenges. These include effectively competing with existing market players that are superior in terms of funding costs, asset size, branch network and infrastructure. We are also constrained in our ability to extend our reach to customers due to a limited branch network.
Due to our new business direction, we need the talent and skills required to execute new business initiatives. We are also constrained by the inability to provide trade facilities for corporate clientele. Lastly, there are also various misconceptions of the company due to past issues and legacy problems.
How do we resolve these challenges?
We revived the personal financing product for government servants to establish and cement market positioning as a preferred financial provider for the government servants. This provides MBSB with a niche market to serve and avoid direct competition with existing market players.
We established REP to only promote and sell retail financial products. This network is less costly to set up and maintain compared with a full-fledged branch, and is able to provide high returns.
We have outsourced the sale of retail financial products to qualified agents nationwide, which provides a greater reach to customers. New talents and skills have been hired from within the industry with attractive remuneration packages. More importantly, we offer them a better career growth due to their position as pioneers in the company.
MBSB is leveraging on other financial institutions for the provision of trade facilities, resulting in fee income opportunities and the ability to become a one-stop financial solution centre.
In the past, MBSB had been media-shy, leading to misconceptions not being corrected. Hence, in the last two years, improvement in the company’s image was achieved through the execution of fresh marketing campaigns on products to increase brand awareness and continuous meetings with analysts.
How is the company positioning itself within your industry? What are your strategies to grow or gain market share?
The company is positioning itself as a key financial provider to the government servants and to the corporate clientele who has been awarded government projects. It shall continue to pursue market share in personal financing through product development and new campaigns, while continuing to work with the government and its agencies in securing financing of their awarded projects.
What are your company’s plans for the future, short-term and long-term?
In the short term, we want to grow our retail assets critically via the personal financing and home mortgage products, and establish our position as a reliable financial provider in the corporate segment. In the long term, we want MBSB to become a respectable industry player with a strong financial position while serving its niche market.
What are your plans to compete in the increasingly globalised environment?
The company shall continue to capitalise on its strengths as a small financial institution in comparison to its peers to compete in a highly competitive environment. These include the agility in decision-making process and personalised customer service, especially for corporate clients. We will leverage on outsourcing to operate efficiently with a fast turnaround time. The company will avoid direct competition with the existing financial players.
What is your dream for your company? How would you like to see it in 10 years?
The company aims to achieve pre-tax profit of RM500 million and be known as a strong financial institution. In early 2009, we established the “Taking MBSB to the Next Level” programme to achieve this profit target. Record profits that were achieved for the last two consecutive years were based on this mission and the long-term business plan being put in place will assist the company in achieving that target.
This article appeared in The Edge Financial Daily, December 6, 2011.
