Bank Islam posts 33% decline in 1Q22

by FAYYADH JAAFAR / pic by TMR FILE

BANK Islam Malaysia Bhd earnings fall 33% year-on-year (YoY) to RM105.917 million in the first quarter of 2022 (1Q22) as it suffered from lower non-fund-based income and a higher provision for impairment of financing and other financial assets.

Net allowance charged for impairment on financing and other financial assets was, however, lower by RM66.5 million from 4Q21.

The lower profit comes despite growth in gross financing and total overhead expenses for 1Q22 declined by RM58.5 million, or 16.6%, to RM293.7 million compared to RM352.2 million in 4Q21.

The decrease in overheads was mainly due to lower personnel and general expenses. Bank Islam will proactively pursue measures to improve cost-efficiency to ensure the business remains sustainable and resilient in a challenging operating environment. 

The Shariah banking group’s pretax profit for the quarter rose 108.5% YoY to RM159.3 million.

Bank Islam group CEO Mohd Muazzam Mohamed (picture) stated the group is committed to realising its LEAP25 aspirations and strategies as the economy recovers.

“We are currently in a new growth phase grounded by the environment, social, and governance (ESG) principles to drive delivery and performance. We have embarked on a journey of developing BIMB’s ESG Framework, incorporating climate and sustainable risk management into the credit assessment,” he added.

On the digital banking proposition, he said the bank has a proactive effort in setting the right technology, people and products to meet the needs of its target segments. 

“We hope to introduce Bank Islam’s digital banking proposition in 3Q22,” he stated in an exchange release today.

The digitalisation effort will see the group leverage advanced capabilities in artificial intelligence through a strategic tie-up between its investment management arm, BIMB Investment Management Bhd and the UK-based Arabesque Asset Management Ltd, wholly owned unit of Arabesque Holding Ltd (formerly Arabesque Asset Management Holding Ltd).

On April 15, 2022, the Securities Commission Malaysia approved the proposal for Arabesque to acquire a 49% equity stake in BIMB Investment.

Subsequently, BIMB Investment will be positioned as a Global Shariah-ESG Fund House with the capabilities to manage local and foreign investors’ funds and expand its business beyond Malaysia, positioning BIMB as the hub for Islamic sustainable investment solutions globally.

BIMB saw an increase of 6.7% YoY and gross financing to RM59.8 billion. Customer deposits and investment accounts rose 10.8% YoY or RM6.6 billion to RM68 billion by the end of March 2022.

BIMB expects a further 25 basis points (bps) hike in the Overnight Policy Rate (OPR) and any increase in OPR will favourably impact its profitability.

Bank Negara Malaysia (BNM) increased the OPR by 25bps to 2% on May 11, 2022.