Bank Islam Malaysia Bhd is proactively addressing its income pressures, with further improvement expected for net income margin (NIM) and gross impaired financing (GIF) in the second quarter of its financial year (2Q 2023).
Chief financial officer Azizan Abd Aziz (pic) said the banking industry has been under pressure throughout 1Q 2023, as such, the bank is relooking into its funding structure to ensure that it is in line with its growth target.
Speaking to reporters during the briefing on Bank Islam’s 1Q 2023 results today, he said that things are looking up for the bank’s NIM, adding that many analysts are positive about the bank’s NIM outlook.
“That’s why I mentioned that after rejigging, and also after relooking into our funding structure, we can see that things are improving when it comes to our NIM.
“Seven out of eight analysts are saying that we will be able to sustain that and report an improved NIM,” Azizan added.
He said in 1Q 2023 ended March 31, 2023, the bank’s NIM stood at 2.06 per cent, with full-year print expected to be at 2.2 per cent; while the GIF ratio was at 1.37 per cent, better than the industry’s average of 1.75 per cent.
Meanwhile, group chief executive officer Mohd Muazzam Mohamed said Bank Islam’s capital remains strong, enabling the bank to consistently distribute dividends to its shareholders.
“With our strong capital, which is in fact, above the industry average, we have the ability to grow and that has been our recipe for us to double our financing growth compared to the industry’s average,” he said.
In 1Q 2023, the bank’s gross financing growth stood at 10.7 per cent, compared to the industry’s average of 5.0 per cent.
For financial year 2023, Bank Islam aims to achieve gross financing growth of 7.0 — 8.0 per cent, at the same time ensuring that the GIF stays below 1.5 per cent.
The bank also expects deposit rates to remain high in the anticipation of another 25 basis point hike in the overnight policy rate (OPR) over the remainder of the year.
In 1Q 2023, Bank Islam’s net profit rose by 11.5 per cent year-on-year (y-o-y) to RM118.09 million from RM105.92 million in 1Q 2022.
Revenue for the quarter jumped 42.6 per cent y-o-y to RM1.10 billion from RM773.97 million previously.
The group’s net income improved due to higher non-fund-based income, which surged by 132.4 per cent, driven by higher investment income and net gain from foreign exchange transactions.
Although the bank’s performance had improved, it was still below expectations, with analysts attributing its underperformance to higher GIF ratio and weaker NIM.
