Bank Islam tops RM500 million profitability mark

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KUCHING: Bank Islam Malaysia Bhd (Bank Islam) announced yesterday a record profit before zakat and tax (PBZT) of RM503.4 million for the 18-month financial period ended December 31 last year.

In a statement released from Kuala Lumpur yesterday, the nation’s first full-fledged Islamic bank said the results translated into a 44-per cent jump on an annualised basis over RM233.1 million as at end-June 2009.

The bank reported its financial performance for the said period following the change in its financial year-end to December to coincide with that of its parent, Lembaga Tabung Haji. It had also adopted the FRS 139 accounting reporting method during the period under review.

Bank Islam’s managing director Datuk Seri Zukri Samat, in the statement, attributed the achievement of surpassing the half-a-billion-ringgit mark for the first time ever to ‘a strong financing growth’; matched by an impressive improvement in asset quality, growing contribution from non-fund based income, decline in ‘cost-to-income ratio’ and continued increase in deposits through current and savings accounts (CASA).

He added that for the financial period, the board of directors had proposed a dividend of 4.75 per cent amounting to RM80.7 million.

During the 18-months, total net financing surged by 22.8 per cent (or 15.2 per cent on an annualised basis) to RM11.86 billion against RM9.66 billion as at end-June 2009. Financing growth mainly came from financing extended to the household sector which expanded by more than 30 per cent.

Despite the robust growth in the financing portfolio, Zukri was particularly encouraged by the sharp decline seen in impaired financing.

“The bank’s net impaired financing amount declined to RM128 million as at December 31 from RM663 million as at June 30, 2009, an improvement of 80.7 per cent or RM535 million. Consequently, the net impaired financing ratio dropped tremendously from 6.7 per cent as at June 30, 2009 to 1.1 per cent, almost 100 basis points lower than the industry average of two per cent.

“Total customer deposits expanded by 6.7 per cent to RM26.9 billion driven by CASA, which accounted for more than 95 per cent of the RM1.7 billion increase.

“CASA growth was propelled by the bank’s new all-time favourite, Al-Awfar which offers main prizes worth RM100,000 in a monthly draw and RM200,000 in a quarterly draw. The Al-Awfar deposit saw a more than three-fold increase during the period under review, amounting to close to RM500 million,” added Zukri.

Non-fund based income increased by 19.6 per cent on an annualised basis to RM235 million on the back of higher fee-based income and investment income. As part of Bank Islam’s revenue diversification strategy, Zukri expected an even more meaningful contribution from this income source.

He also said the bank would continue to launch innovative products such as ‘Transact-At-Palm’ (TAP) mobile banking and Visa Debit Card-i to grow its non-fund based income.

Bank Islam also won a wide range of awards and accolades during the 18-month period, the most significant being in the form of an A1/P1 rating with a stable long-term rating outlook which RAM Rating Services Bhd assigned in October last year.

“This year will also be the second year of Bank Islam’s ‘Sustainable Growth Plan’, a new six-pillar strategic blueprint launched in June 2009 to replace the previous ‘Turnaround Plan’ – slated at achieving its long-term ambition to become a global leader in Islamic banking,” enthused Zukri.