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MBSB Navigates Challenging Waters: A Look at Their Q1 2025 Performance
MBSB Berhad, a prominent financial services provider in Malaysia with a strong focus on Islamic banking, has just released its unaudited financial results for the first quarter ended 31 March 2025. This report offers a glimpse into the company’s performance amidst a dynamic economic landscape, showcasing both resilience and areas for strategic focus. While facing some quarter-on-quarter headwinds, the Group demonstrated a commendable increase in profit compared to the same period last year, reinforcing its commitment to shareholder returns with a recently paid dividend.
Key Takeaways from Q1 2025:
- Profit Before Taxation and Zakat (PBT) increased by 10.2% compared to Q1 2024.
- Profit After Taxation and Zakat (PAT) rose by 8.1% year-on-year.
- A final dividend of 1.80 sen per ordinary share for FY2024 was paid in March 2025.
- Maintained healthy capital adequacy and liquidity ratios.
Unpacking the Financial Highlights: Q1 2025 Performance
Let’s dive into the core numbers and see how MBSB performed in the first quarter of 2025, comparing it against the same period last year and the immediate preceding quarter to get a holistic view.
Year-on-Year Performance (Q1 2025 vs. Q1 2024)
1st Quarter 2025
Revenue
RM 868.0 million
Net Income (pre-impairment)
RM 378.6 million
Expected Credit Losses (ECL)
RM 28.1 million
Operating Expenses (OPEX)
RM 233.8 million
Profit Before Taxation and Zakat (PBT)
RM 116.7 million
Profit After Taxation and Zakat (PAT)
RM 84.7 million
Earnings Per Share (EPS)
1.03 sen
1st Quarter 2024
Revenue
RM 893.4 million
Net Income (pre-impairment)
RM 364.8 million
Expected Credit Losses (ECL)
RM 44.6 million
Operating Expenses (OPEX)
RM 214.2 million
Profit Before Taxation and Zakat (PBT)
RM 105.9 million
Profit After Taxation and Zakat (PAT)
RM 78.3 million
Earnings Per Share (EPS)
0.95 sen
For the first quarter of 2025, MBSB recorded a revenue of RM868.0 million, a slight decrease of 2.8% compared to RM893.4 million in the first quarter of 2024. This was primarily attributed to lower profit income from loans, financing, and advances. Despite the revenue dip, the Group managed to increase its net income (pre-impairment) by 3.8% to RM378.6 million, demonstrating improved operational efficiency.
A significant positive was the reduction in Expected Credit Losses (ECL), which fell by 36.9% to RM28.1 million from RM44.6 million in the prior year’s corresponding quarter. This indicates better asset quality or more effective risk management. However, operating expenses saw an increase of 9.1%, reaching RM233.8 million, mainly due to higher personnel expenses as the Group continues to invest in human capital.
Despite these movements, MBSB successfully grew its Profit Before Taxation and Zakat (PBT) by 10.2% to RM116.7 million, and its Profit After Taxation and Zakat (PAT) by 8.1% to RM84.7 million. This translated into an improved Earnings Per Share (EPS) of 1.03 sen, up from 0.95 sen in Q1 2024.
Quarter-on-Quarter Performance (Q1 2025 vs. Q4 2024)
Comparing the current quarter to the immediate preceding quarter (Q4 2024) reveals a different picture. Revenue was down 4.1% from RM905.0 million, and net income (pre-impairment) decreased by 8.7%. PBT saw a notable decline of 47.0% from RM220.1 million in Q4 2024, and PAT followed suit with a 44.1% drop. This significant quarter-on-quarter reduction was primarily due to an impairment writeback recorded in the last quarter of 2024, making direct comparison challenging without considering such one-off adjustments.
Snapshot of Key Financial Figures (Group)
| Financial Metric | Q1 2025 (RM’000) | Q1 2024 (RM’000) | Change (%) |
|---|---|---|---|
| Revenue | 868,022 | 893,447 | (2.8%) |
| Net Income (pre-impairment) | 378,597 | 364,767 | 3.8% |
| Expected Credit Losses | 28,133 | 44,615 | (36.9%) |
| Operating Expenses | 233,765 | 214,209 | 9.1% |
| Profit Before Taxation & Zakat | 116,699 | 105,943 | 10.2% |
| Profit After Taxation & Zakat | 84,680 | 78,341 | 8.1% |
| Earnings Per Share (sen) | 1.03 | 0.95 | 8.4% |
Balance Sheet and Asset Quality
As at 31 March 2025, MBSB’s total assets stood at RM62.72 billion, a decrease from RM64.26 billion at the end of 2024. Gross loans, financing, and advances also slightly declined to RM42.63 billion from RM42.98 billion. Deposits from customers decreased to RM39.37 billion from RM39.78 billion. While there was a slight increase in the gross impaired loans ratio to 5.49% (from 5.33% at 31 December 2024), the Group’s capital adequacy ratios improved across the board, with CET1, Tier 1, and Total Capital Ratios all showing an increase to 19.362%, 19.362%, and 21.920% respectively, indicating a robust capital buffer. The Liquidity Coverage Ratio (LCR) remained healthy at 147.14% (with a 12-month average of 183.97%), comfortably above the minimum regulatory requirement of 100%.
Segmental Performance Insights
The segmental breakdown offers a deeper understanding of the Group’s performance:
- Consumer Banking: This segment experienced a significant shift, reporting a loss before tax of RM40.12 million in Q1 2025, compared to a profit of RM231.095 million in Q1 2024. This change warrants closer monitoring.
- Corporate Banking: Showed consistent growth, with profit before tax increasing to RM32.36 million from RM31.41 million in Q1 2024.
- Global Markets: Demonstrated a strong turnaround, moving from a loss of RM138.82 million in Q1 2024 to a profit of RM16.39 million in Q1 2025.
- Investment Banking: Also saw a positive improvement, with profit before tax rising to RM22.01 million from RM7.83 million in the prior year.
- Others: This segment reported a substantial profit before tax of RM358.08 million in Q1 2025, a significant increase from a loss of RM25.58 million in Q1 2024. This considerable swing, along with a large negative inter-segment elimination, suggests internal reclassifications or specific non-core activities that had a material impact on overall Group PBT.
Navigating Risks and Charting the Future
MBSB acknowledges the challenging global economic environment, with the International Monetary Fund (IMF) forecasting a modest global growth of 3.3% for 2025. Potential risks include the impact of U.S. tariffs on global trade and investor confidence, which could influence external demand for Malaysia’s exports.
Domestically, Bank Negara Malaysia (BNM) projects a robust GDP growth of 4.5%–5.5% for Malaysia, underpinned by resilient domestic demand, sustained investment, and supportive government policies. However, geopolitical tensions, evolving trade policies, and financial market volatility remain key risks to monitor.
In response to these dynamics, MBSB Group is guided by its three-year strategic plan, FLIGHT26, introduced in early 2024. This strategy is designed to improve and optimize four critical areas:
- Cost of Funds: Enhancing efficiency in managing funding costs.
- Financing Growth: Driving sustainable growth in its financing portfolios.
- Operating Expenditure: Optimizing operational efficiency and cost management.
- Fee-Based Income: Increasing the proportion of non-interest/profit income.
The Group is also committed to delivering excellent customer service and enhancing value propositions through new product offerings, digital channels, and superior customer experience.
On the legal front, MBSB Bank is involved in a contingent liability related to an alleged breach of contract, with a claim amounting to approximately RM40.35 million. The case is currently awaiting decision, but the company’s solicitor believes MBSB Bank has a strong defense.
Summary and
MBSB’s Q1 2025 results paint a picture of a financial institution demonstrating resilience and strategic adaptation. While facing some quarter-on-quarter adjustments, particularly due to prior period impairment writebacks, the Group delivered solid year-on-year profit growth. This performance is underpinned by healthy capital adequacy and liquidity positions, which are crucial for navigating the current economic climate.
The FLIGHT26 strategy provides a clear roadmap for MBSB to enhance its financial performance by focusing on key areas like cost efficiency, financing growth, and diversifying income streams. The domestic economic outlook remains supportive, though external risks persist.
Investors should continue to monitor MBSB’s execution of its FLIGHT26 strategy, particularly its ability to sustain financing growth and expand fee-based income while managing asset quality and operational costs. The resolution of the ongoing contingent liability will also be a point of interest.
Here are some key points to consider:
- Profitability Trend: Observe if the year-on-year profit growth momentum can be sustained in subsequent quarters, especially given the quarter-on-quarter fluctuations.
- Asset Quality: While ECL decreased year-on-year, the slight increase in gross impaired loans ratio warrants attention.
- Strategic Execution: How effectively will FLIGHT26 translate into tangible improvements in cost of funds, financing growth, and fee-based income?
- Macroeconomic Factors: Keep an eye on global trade policies and domestic economic stability, as these will directly influence the banking sector.
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