BRIEFING FOR ANALYSTS

MBSB PERFORMANCE FOR

1 OCTOBER – 31 DECEMBER 2015

by Dato’ Ahmad Zaini Othman

President and CEO

26 FEBRUARY 2016

1

HIGHLIGHTS

2

IMPACT ON MBSB’S BROAD PERFORMANCE

FINANCIAL REVIEW

MOVING FORWARD STRATEGIES

IMPACT ON MBSB’S BROAD PERFORMANCE

3

Introduction

Remain committed to see through collective assessment that began last quarter of 2014 through 2017

To ensure ‘closing the gaps’ being observed/ executed

Impact ( - )

Collective assessment, 2015 - 75% of total allowances (about RM526 million)

Funding challenges

Regulatory/ Compliance costs. Prudential/ Cost to Income

Conservative assessment on Legacy loans

9 months spent on Merger

Cost increased due to Merger costs

Impact ( + )

Revenue showed steady increment. Grew to RM3.05 billion from RM2.6 billion a year earlier. Operating profit before allowances stood at RM1.05 billion (almost similar a year earlier)

Gross loans and financing improved by 4.38% from RM33.8 billion

Cost to Income ratio of 22.66% i.e. improved by 0.19% from 22.85% in the preceding quarter

Net impaired loans and financing ratio stood at 2.81% as at 31st December 2015, marked a reduction from 4.05% recorded in preceding year 2014

4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15

Revenue 720.74m 667.11m 672.08m 678.99m 594.33m 690.60m 765.78m 768.03m 825.69m

PBT 251.42m 266.96m 310.89m 267.42m 87.28m 157.65m 129.27m 66.79m 1.31m

Opex 114.15m 78.28m 68.68m 74.87m 83.13m 84.12m 75.22m 73.15m 75.82m

-

100.00m

200.00m

300.00m

400.00m

500.00m

600.00m

700.00m

800.00m

900.00m

GROUP REVENUE, PROFIT BEFORE TAX & OPERATING EXPENSES

2009 2010 2011 2012 2013 2014 2015

Total assets 9.30b 12.23b 17.36b 26.36b 35.25b 37.67b 41.09b

Shareholders' equity 0.55b 0.38b 1.13b 1.50b 2.19b 4.68b 4.86b

Net ROE 10.76% 31.28% 43.06% 34.01% 32.45% 29.56% 5.40%

Net ROA 0.69% 1.36% 2.20% 2.04% 1.94% 2.78% 0.65%

-

5.00b

10.00b

15.00b

20.00b

25.00b

30.00b

35.00b

40.00b

45.00b

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

50.00%

RETURN ON ASSETS / EQUITY

4.51% 3.84% 3.83% 3.86% 3.55% 3.59% 3.43% 3.38% 3.38%

19.64%

21.72%

20.27% 20.29%

22.36%

24.52% 23.37%

22.85% 22.66%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15

NET INCOME MARGIN & COST TO INCOME RATIO

NIPM Cost to income ratio

4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15

Net NPLF 5.44% 5.20% 5.26% 5.03% 4.21% 4.14% 3.94% 3.37% 3.02%

Pre2009 28.02% 24.97% 24.83% 22.34% 18.34% 17.60% 17.35% 15.46% 14.84%

Post2009 2.14% 2.40% 2.58% 2.75% 2.59% 2.65% 2.54% 2.18% 1.91%

NET NON-PERFORMING LOANS AND FINANCING (COMPANY)

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COMPOSITION OF GROSS LOANS AND FINANCING

4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15

Corporate 9.2% 9.5% 9.7% 10.9% 11.3% 11.9% 13.1% 14.1% 14.9%

Auto 0.6% 0.7% 0.7% 0.8% 0.9% 0.9% 1.0% 1.1% 1.1%

Mortgage 16.9% 16.8% 16.5% 16.3% 16.2% 16.2% 16.1% 16.1% 16.0%

PFI 73.3% 73.1% 73.0% 72.1% 71.7% 70.9% 69.7% 68.7% 68.0%

30,296m

30,416m 30,523m

31,001m 31,032m

31,220m

31,590m

31,748m 31,785m

4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15

GROWTH IN NET LOANS AND FINANCING

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4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15

Sukuk 493m 498m 493m 498m 1,150m 1,163m 2,050m 2,074m 2,828m

Cagamas 2,267m 2,247m 1,819m 1,800m 2,373m 2,853m 2,825m 2,796m 2,767m

Deposit 28,193m 29,061m 29,373m 28,668m 27,531m 27,463m 29,926m 29,676m 28,585m

GROWTH IN FUNDING

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107.35%

102.13%

112.38% 112.89%

107.46%

112.72% 111.19%

94.81% 93.52%

98.31%

101.72%

97.88%

99.93%

92.99%

2009 2010 2011 2012 2013 2014 2015

NET LOANS & FINANCING TO DEPOSIT AND TOTAL FUNDING RATIO

Net loans/financing to deposit Net loans/financing to total funding

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PROPELLING MBSB FURTHER AND BEYOND…

IN PURSUIT OF NEW HORIZON

MOVING FORWARD STRATEGIES

THEME

WHAT ARE THE MOVING FORWARD PLANS?

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No. Areas Broad Ideas

1. Business Focus • Corporate Business, Government initiated Contracts, Equipment Financing Programmes, Dedicated EF programmes, etc.

2. Cost rationalization

• PIP, selective recruitment, replacement, etc. • Branch Rationalization • 10% - 15% reduction in operating expenditure &

maintaining cost to income below 23% • Closure of non-core subsidiaries • Review service providers processes i.e. collection agency,

IT vendors, document storage.

3. Improving quality asset

• Anti-Attrition – Aggressive and proactive measure to retain quality customers

• Credit – stringent credit policy • Business – utilizing Biro code/AG across all products • Risk Based Pricing • Completing the impairment programme by 2017

4 Strengthening Capital Base

• Planned capital raising exercise to strengthen Prudential/ Business requirements

WHAT ARE THE MOVING FORWARD PLANS? (..cont’)

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No. Areas Broad Ideas

4. Proper pricing structure

• Business – Push for higher NIM financing & meeting prudential requirements;

• Target PR1MA, PPA1M, affordable, EF, MRT, PFI refinancing, etc.

5. Efficiency in processes

• IT – Enhance IT infrastructure capabilities i.e. internet/ online banking, platform for EPF-I in the future

• Risk Management– review corporate scorecard • Wealth Mgmt – EPF-i related proposition • Retail Credit - Mobile application for retail financing to be

introduced this year

6. Collections • Retail Collection – Strengthening further collaboration with agencies, review requirement of manpower, investment on system to improve TAT and productivity

7. Deposit • SME Business Cash Accounts

Q & A

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