KUALA LUMPUR, Wednesday, [19 March, 2008]: With another strong earnings of RM182.3 million profit before zakat and tax (PBZT) for the six months ended 30 December 2007, Bank Islam Malaysia Berhad (Bank Islam), today signaled it will be more aggressive in growing market share. The Bank’s PBZT is 10% higher than the RM165.8 million achieved in the same period last year. At the Group level, PBZT rose 17.4% to RM194.3 million.
Managing Director Dato’ Zukri Samat told reporters at a media briefing that Bank Islam had prior to December been very focused in implementing the turnaround plan to return to profitability.
“With six quarters of solid earnings growth behind us, we have built a strong foundation for an aggressive programme to compete for a bigger share of market to drive the next phase of our growth,” he added.
Leveraging on the heightened awareness created by the re-branding programme launched last August, the Bank’s consumer banking division, has embarked on a sustained marketing and promotions programme of the core and traditionally popular products; while the business banking division has adopted a similar strategy to promote value-adding products for its corporate customers.
“New features have been added to enhance popular products and we hope to roll out several innovative new products in the next quarter,” he added.
Reviewing the financial performance of the six months ended December 2007, Dato’ Zukri said the Bank’s total income grew 32.5% to RM579.5 million from RM437.2 million in the corresponding period in the previous year. The RM194.3 million PBZT at the Group level is due mainly to the turnaround of its 100% subsidiary BIMB Foreign Currency Clearing Agency Sdn Bhd (BIFCCA) which reported a PBZT of RM12.6 million. Group income rose to RM593.9 million.
Reflecting the efforts to recover and rehabilitate non-performing financing (NPF), the gross NPFs fell from RM2.16 billion at June 2007 to RM1.95 billion at December 2007, while the net NPF ratio improved from 10.8% to 8.8%. Total assets at the end of December was 11% higher at RM21.15 billion compared with RM19.12 billion at end June.
On an annualized basis, the return on equity improved to 32.4% and the return on asset (ROA) improved to 1.8%. Its risk-weighted capital ratio similarly improved to 13.4%.
With regards to the plan to “carve out” NPFs, Dato’ Zukri said the arising from the due diligence exercise that was completed in December, the Bank has decided there was no need to proceed with the plan.
He explained that the objective of carving out the NPFs was to strengthen the balance sheet to enable the Bank to grow its business unencumbered. However, with the sustained and strong earnings growth over the last six quarters, and a significant reduction in NPFs to a manageable level, the “carve out” is no longer necessary.
Updating the media on the Turnaround Plan which is targeted to be fully implemented by 2010, Dato’ Zukri said the implementation of the five components are progressing on schedule and delivering the results as envisaged.
The five components of the turnaround plan are (i) capital restructuring, (ii) revamp of the IT infrastructure, (iii) a transformation programme (incorporating rebranding) (iv) a cost rationalization exercise and (v) human capital development programme; all of which are inter-complementary.
Dato’ Zukri said the Bank which had stayed very focused on reforms to address structural weaknesses of the institution and to transform the work culture and core values in customer service, will be actively pursuing the huge opportunities that still exist in the local market.