Bank Muamalat profit grows on higher financing income

by SULHI KHALID/ pic by MUHD AMIN NAHARUL

Total revenue rose by 9.3% year-on-year to RM1.33 billion, underpinned by higher financing income of RM903.8 million in tandem with the expansion of its gross financing base, it noted in a statement yesterday.

The bank’s total gross financing grew to RM15.5 billion as at the end of March 2019, from RM14.9 billion a year ago.

The country’s second full-fledged Islamic bank noted higher income in investment securities and gain in foreign-exchange transactions supported the growth in revenue.

Bank Muamalat CEO Datuk Mohd Redza Shah Abdul Wahid said the improved performance was backed by its continuous effort in managing cost of operations and higher growth in gross financing.

“These improvements are the results of our constant effort on prudent recovery, credit risk management initiatives and better quality financing base expansion,” he stated.

The full-fledged Islamic bank managed RM23.94 billion in assets last year, while its total shareholders’ fund stood at RM2.3 billion. Total deposits came in at RM20.17 billion that year. The consumer segment was the bank’s largest exposure that year at 63.3% of its total portfolio.

Following Bank Negara Malaysia’s overnight policy rate cut in May this year, the bank lowered its base rate and base financing rate by 25 basis points to 3.81% and 6.81% per annum respectively.

Fixed term deposit rates were also lowered by the same quantum. Note that the bank raised its base and base financing rates by 11 basis points at the start of the year, citing an increase in funding costs.

The bank had 63 branches nationwide last year providing Islamic-based products and services to consumers.

Bank Muamalat’s capital position remained healthy with tier 1 capital ratio and total capital ratio standing at 15.8% and 18.6% respectively as at end-March.

The bank intends to strengthen its busi

ness in the gold and investment account, as well as concentrate more on digitalisation in keeping up with current market demands.

Bank Muamalat is 70%-owned by DRB-Hicom Bhd, while the remaining stake is held by Khazanah Nasional Bhd.

The bank was previously subject to a potential merger with Malaysia Building Society Bhd (MBSB), but the deal fell through in 2017 on suspected valuation issues.

Bank Negara Malaysia green-lighted merger talks between the two banks as early as Sept 30, 2015, but despite repeated extensions, both parties failed to reach an agreement.

Bank Muamalat was one of only two domestic standalone Islamic banks in Malaysia at the time and the merger with MBSB would have created Malaysia’s second-largest Islamic bank with RM62.1 billion in assets.

Maybank Islamic Bhd is now the largest Islamic bank on asset base.

MBSB has since become a full-fledged Islamic banking after completing the RM645 million acquisition of Asian Finance Bank early last year.