KUALA LUMPUR: Bank Pembangunan Malaysia Bhd posted net profit of RM1.07 billion for its financial year ended Dec 31, 2008, underpinned by better performance and exceptional income from the divestment of SME Bank.

The bank said on June 29 net interest income rose by RM236.0 million from RM441.4 million in 2007 to RM677.3 million in 2008, attributable to higher recovery income.

“Concurrently, the non-interest income increased from RM134.5 million in 2007 to RM510.6 million in 2008, arising from the divestment of SME Bank,” it said.

Other factors for the much improved performance were higher operational and non-operational income, lower expenses as well as reduction in loan loss provisions.

This was the first time in the bank’s 35-year history the earnings had surpassed the RM1 billion mark, according to a statement issued by the bank on June 29.

“Bank Pembangunan implemented several proactive measures to further strengthen its asset quality including the introduction of annual review and new classification of ‘watch list’ to ensure proper pre-emptive measures would be taken on such loan accounts,” it said.

The bank said other measures taken during the financial year was to enhance the screening of new applications to weed out unproductive and non-viable applications, which resulted in considerable reduction in loan approvals in 2008.

The bank said 24 loan applications for RM2.6 billion were approved to finance various projects in the infrastructure, maritime and high TECHNOLOGY [] sectors compared to total approvals of RM4.7 billion involving 67 loans in 2007.

It said shareholders’ fund increased by another RM965.3 million in 2008 resulting in the risk weighted capital ratio at 28.3% as against the banking system average of 12.7%. 

The quality of assets continued to improve as the amount of non-performing loans (NPL) declined by RM205.6 million. The net NPL ratios stood at 0.8% at end 2008, an improvement from 2.0% a year ago, and lower than the industry average of 2.2%.