The Islamic-based lender is aiming to become the champion in Syariah-ESG total financial solution space

by NUR HANANI AZMAN / Pic by RAZAK GHAZALI

BANK Islam Malaysia Bhd aims to surpass RM100 billion asset size by 2025 from the current asset size of RM75 billion through organic growth and expansion into digital banking space.

Under its five-year post restructuring plan, the Islamic-based lender is aiming to become the champion in Shariah-environmental, social and governance (ESG) total financial solution space with leadership in digital banking and social finance.

Bank Islam CEO Mohd Muazzam Mohamed (picture) said it will continue to strengthen its five business drivers namely wholesale banking, enterprise, digital bank, wealth management and social finance.

“The restructuring exercise will simplify and streamline the shareholding, corporate and governance, structures for efficiency, agility and synergy of the group.

“It will enhance positioning to deliver a full spectrum of Islamic financial offerings to our customers and gain direct access to raise capital to fund future growth and expansion,” he said at the bank’s media briefing “The Way Forward” yesterday.

BIMB Holdings Bhd, which owns Bank Islam, announced the restructuring exercise in December 2019, but the corporate exercise was delayed due to the Covid-19 pandemic.

The restructuring exercise will see Bank Islam take over BIMB’s Main Market listing status. The process is currently about 20% complete according to Mohd Muazzam and is on track for completion by August this year.

Lembaga Tabung Haji is the controlling shareholder of BIMB with a 53.14% stake, followed by the Employees Provident Fund (12.24%), Permodalan Nasional Bhd (10.93%), Yayasan Pelaburan Bumiputera (5.07%) and Retirement Fund Inc (2.65%).

Following the restructuring plan, Mohd Muazzam said the major shareholder will remain the same but the percentage of shares held will change.

“They will exchange their shares in BIMB with shares in Bank Islam. When they do the exchange, they not only get the shares of Bank Islam, they will get some share in Takaful Malaysia (Syarikat Takaful Malaysia Bhd),” he explained.

On April 13, the group disclosed it would issue 222.22 million new shares, representing 12% of its issued share capital, under its private placement exercise that would raise RM800 million.

Mohd Muazzam said the amount will be used to settle outstanding warrants and sukuk, while the remaining will come from internally generated funds.

He said the sukuk settlement will reduce the group’s finance cost by about RM55 million per year and the sukuk redemption is expected in the second quarter of 2021.

“The private placement exercise has been oversubscribed 1.7 times by existing shareholders and new investors. Despite the strong demand for the share placement, the group can only allocate small portions of shares to new investors.

“We need to give priority to our existing investors and shareholders who have been supporting us all this while. The profile of new investors are mainly institutions and fund managers, and locally based,” he said.

Mohd Muazzam added that BIMB’s staff will be reskilled and absorbed into Bank Islam in positions available to suit their competency.

“There will not be any retrenchment exercise. From the initial stage, we have never considered any retrenchment as part of the whole scheme,” he added.

He said Bank Islam will not be applying for the digital banking licence to leverage its existing Islamic banking licence.

“Bank Islam has established a dedicated division to design and build our digital-only proposition. Centre of Digital Experience was established a year ago, and Bank Islam is planning to launch the digital-only proposition within this year.

“The division focuses on experimenting with next generation technologies and delivering financial solutions to the unserved and underserved segments in Malaysia,” he said.