Revenue for the quarter was lower at RM1.3b against RM1.4b due to higher net allowance for impairments

by S BIRRUNTHA / pic by BLOOMBERG

BIMB Holdings Bhd’s earnings continue to be depressed by allowances for impairment on financing and advances in the third quarter ended Sept 30, 2020 (3Q20).

The Shariah-based lender’s net profit fell 34.8% year-on-year (YoY) to RM135.81 million due to a higher net allowance for impairments, its exchange filing yesterday noted.

Revenue for the quarter was 3.6% YoY lower at RM1.33 billion against RM1.38 billion as economic activity recovered in the quarter. The group declared an interim single-tier dividend of 12.6 sen for the quarter.

BIMB stated that it has been persevering with sustainable financial results that are within the industry’s average, and cognisant of and leveraging the low interestrate environment.

“The bank has also maintained its prudent stand with regard to the market outlook. A pre-emptive impairment provision in the form of management overlay were made during the quarter in consideration of the challenging economic environment,” it stated.

Moving forward, it noted that Bank Islam Malaysia Bhd aims to carry on with its strategic direction, while emphasising on its support of the economy by maintaining sustained business growth, giving continuous support to the community as a whole, protecting consumers’ financial viability and leveraging digitalisation.

Despite the difficult path ahead, the bank will continue its 2020 initiatives towards preserving sustainability for its business and all stakeholders.

For the cumulative nine-month period, BIMB’s net profit fell 17.8% YoY to RM498.07 million, while turnover declined 7.6% YoY to RM3.72 billion.

The decrease in profit was mainly due to lower financing income arising from the multiple overnight profit rate reductions and recognition of modification loss due to the payment moratorium.

Its takaful industry continues to face headwinds from the Covid-19 pandemic and associated economic impact to the Malaysian economy, and the insurance and takaful industry.

As an early adopter of online distribution and new digital technologies, the banking group noted that it was able to eliminate some sales and operational challenges faced during the Covid-19 pandemic period.

It has also increased its presence on social media to cross-sell its online products, especially targeting potential customers who may not have access to intermediaries for face-to-face selling.

“The group is adjusting for a very different market and operating landscape as concerns on job security remain heightened, and consumers will be more cautious about their spending. It is expected that economic activities will take some time to recover.

“Amid the uncertainties in the current economic environment to support business expansion, the group remains vigilant and cautious in managing business growth and risk profile of our portfolio,” it added.

BIMB’s share price ended 0.54% or two sen higher at RM3.70 yesterday, valuing the group at RM6.63 billion.