Islamic financing which makes up 40% of total banking assets have grown in acceptance among the non-muslims. According to Bank Islam Group Chief Executive Officer Muazzam Mohamed, there has been a higher take up in terms of house and personal finance among the non-muslim population. And due to the unique features of their deposit and investment account products, these were also well accepted by them.
According to him, Bank Islam Malaysia Berhad (Bank Islam or the Group), reported a net profit of RM254.2 million for the six months ended 30 June 2023 (1H2023), an increase of 14.0% over the corresponding period in 2022.
Despite the challenging global economic climate, the Group’s revenue for the period rose 39.4% to RM2.24 billion (RM2,224.1 million) versus RM1.56 billion (RM1,595.9 million) last year.
The increase was driven by an improvement in net income due to higher non-fund-based income, which surged by RM117.2 million or 134.8%, driven by higher investment income and net gain from foreign exchange transactions.
Net fund-based income increased by 3.1% on the back of year-on-year gross financing growth and improving net income margin (NIM) to 2.11% for 2Q2023 from 2.06% at 1Q2023.
This performance translates into earnings per share of 11.37 sen and an annualised net return on equity of 7.1%. As of 30 June 2023, Bank Islam Group’s total assets improved further at RM87.5 billion, with a year-on-year growth of 5.3%, spurred by year-on-year growth in financing and investment securities.
Gross financing grew 9.3% year-on-year to RM66.3 billion, while customer deposits and investment accounts stood at RM72.3 billion, with a year-on-year increase of RM2.0 billion or 2.8%.
This was mainly attributable to the robust year-on-year growth of 6.4% or RM1.7 billion in total current and saving accounts and transactional investment accounts (CASATIA), to stand at RM28.3 billion.
This composition made a healthy level of 39.1% of total customer deposits and investment accounts. The Group’s Total Capital Ratio remained strong at 19.6%.
The Group’s capital and liquidity remain healthy, reflecting our growth momentum and fundamentals remain strong. As of 30 June 2023, the gross impaired financing ratio has improved to 1.03%, compared to 1.37% at the end of March 2023, and remains better than the industry average of 1.75%.
Muazzam said that the first half results reflect the Group’s resilience and focus on delivering value to its stakeholders despite the challenging market landscape and weaker global growth.
Notwithstanding, the Group continues to navigate uncertainties with prudent liquidity and funding cost management alongside cost optimisation measures. The Group remains steadfast in executing its five-year strategy roadmap (LEAP25), encompassing the development of Shariah ESG total financial solution leadership in digital banking and social finance.
“While we strive for growth, financial inclusion remains our main mission. Bank Islam’s foundation has intrinsically been values-based, driving us to explore the vast potential of Islamic finance and leverage Islamic financial instruments for community and environmental betterment. As the pioneering bank for the iTEKAD Programme, we aim to strengthen economic resilience and cultivate sustainable income streams for eligible microentrepreneurs, empowering them through capacity building,” said Muazzam.
Since its inception in 2020 until 31 July 2023, Bank Islam has disbursed RM14 million in iTEKAD and funding escalator, directly benefitting more than 900 recipients and fostering their upward mobility.
