Civil Service Pay Rise? MBSB Shares Jump

I don’t usually comment on stocks but this one’s actually relevant (excerpt):

MBSB shares jump on possible wage increase for civil servants

PETALING JAYA: The rally in Malaysia Building Society Bhd (MBSB) shares could be due to its potential to be the beneficiary of a possible increase in civil servant salaries and an anticipation of mortgage tightening measures.

MBSB's share price jumped 18 sen or 14% to RM1.47 while its warrants soared 15.5 sen or 33% to 62.5 sen yesterday.

A source familiar with the matter told StarBiz that MBSB could benefit from the possible increase in civil servant pay rise anticipated in the upcoming Budget 2012.

“The pay rise will increase the amount of disposable income of civil servants that may prompt them to refinance some of their loans with MBSB.

“And the expected curb in mortgage lending would also put MBSB at an advantage as it not regulated by Bank Negara,” he said.

Apart from that, the source said MBSB was also a fundamentally sound company which expected to post another strong quarterly result.

MBSB is an exempt finance company, a status granted by the Finance Ministry on March 1, 1972, which allows it to carry on a finance business without a licence.

Established as a building society to provide mortgage loans, MBSB has since balanced its portfolio by not only providing mortgages, but is also now a major non-bank provider of consumer financing, especially to civil servants.

More household borrowing soon? You bet.