Bank Islam embarks on three-year growth plan

Tags: Bank Islam Malaysia Bhd | BIMB | BIMB Holdings Bhd | Lembaga Tabung Haji | Zukri Samat

Written by The Edge Financial Daily
Wednesday, 02 September 2009 23:32

KUALA LUMPUR: Bank Islam Malaysia Bhd (BIMB), which sees its turnaround complete with a RM233.1 million pre-tax profit in the fiscal year ended June 30, 2009 (FY09), is embarking on a three-year growth programme that may include mergers and acquisitions (M&A).

In a statement today, its managing director Datuk Zukri Samat said: "Following the successful completion of the turnaround plan, characterised by healthy profits over three consecutive financial years, the bank will now embark on a three-year sustainable growth plan."

He said the growth plan would include six pillars — business innovation, robust risk management, strengthening infrastructure, building capacity, franchise development and corporate expansion.

Zukri said corporate expansions would possibly include M&A, strategic partnerships and "white-labelling" initiatives.

He added it would offer syariah-based products locally and abroad that were developed on a joint research and development between the bank and its strategic partners.

"In this regard, we will start the ball rolling by exploring opportunities which are closer to home or where we already have a presence," added Zukri.

In FY09, the bank posted a lower pre-tax profit of RM233.1 million versus RM308.3 million a year earlier due to a high base effect given an exceptional item of RM127.95 million registered in FY08.

Its operating profit surged 28% to RM359.2 million from RM280.2 million in the previous year aided by a net financing growth of 6.6% to RM9.7 billion and deposit growth of 21.4% to RM25.2 billion.

Total income rose 10% to RM1.27 billion from RM1.15 billion, with the non-fund based income accounting for 11% of total income, a significant increase in contribution from 8.1% in FY06.

The bank's risk-weighted capital ratio (RWCR) stood at 13.6% and core capital ratio 12.2%. To date, Bank Islam has received RM324 million from BIMB HOLDINGS BHD [] and Lembaga Tabung Haji under the first tranche of the fresh capital injection exercise.

Post-overall capital injection, the RWCR would strengthen to 18%. The bank's net non-performing financing ratio was 4.9% and the rise in its financing loss coverage ratio to 80.8%.

Bank Islam's return on equity declined to 16.5% and return on assets was down to 0.9%. Cost-to-income ratio dropped slightly to 56.7%.