Bank Rakyat’s 9M19 pretax profit rises 4%

By BERNAMA / Pic By TMR File

BANK Kerjasama Rakyat Malaysia Bhd’s (Bank Rakyat) profit before tax and zakat rose 4% to RM1.29 billion for the first nine months ended Sept 30, 2019 (9M19), from RM1.24 billion in the same period last year.

Amid weaker consumer sentiment in the economy, the higher profit was contributed by financing and treasury activities, coupled with more effective cost management procedures, the bank said in a statement.

This was despite the reduction of the Overnight Policy Rate in May 2019, which marginally affected the Islamic cooperative bank’s net profit.

The performance resulted in a rise of return on shareholders’ fund of 10%.

Bank Rakyat chairman Datuk Noripah Kamso said there has been a gradual uptrend in all of the group’s customer financing, as the bank’s strategy of diversifying into non-personal financing — namely hire purchase financing, mortgages, pawn broking, and commercial loans — contributed to the encouraging performance.

“As our profits grew, our retained profits have increased by RM1 billion, which has been encouraging for the team and the board who have been focused on strengthening systems and processes, as well as governance in the group,” she added.

The group’s cost to income ratio (CIR) stands at a healthy rate of 35.9%, which is significantly lower than the domestic banking industry’s average CIR of 45%.

Meanwhile, asset quality remained resilient as the group’s gross impaired financing improved from 2.3% to 2% through close monitoring and tracking.

The bank’s BR25 initiative, a five-year transformation plan, will bear fruit next year, Noripah added.

The BR25 initiative is the bank’s aspiration towards the year 2025 and becoming a sustainable bank, driven by digitalisation and technological evolution in order to serve customer needs in the era of banking 4.0.

Bank Rakyat is Malaysia’s second-largest Islamic lender, as well as the sixth-biggest Islamic institution globally by revenue, profit and asset size.

In the Far East Asian region, the Islamic cooperative bank is the eighth fastest-growing Islamic finance institution.