KUALA LUMPUR, Thursday [6 September, 2007]: Bank Islam Malaysia Berhad (Bank Islam) reported its highest profit ever in its 24 year history with a profit before zakat and tax (PBZT) of RM255.49 million for financial year ended 30 June 2007 (FY2007).
The PBZT, achieved on an all time high income of RM1.03 billion, also marks the Bank’s full recovery from last two years’ of losses.
In FY2006, it reported a loss before zakat and tax of RM1.28 billion on an income of RM948.87 million.
Managing Director Dato’ Zukri Samat told reporters at a media briefing that based on the FY2007 financial performance, the Bank achieved a return on equity (ROE) of 24.5% and a return on asset (ROA) of 1.5%.
The Bank’s other financial indicators also improved in tandem. Total assets grew 30.9% to RM19.09 billion from RM14.60 billion, its risk-weighted capital ratio improved from -2.84% to 12.69%. (This compares with a minimum capital requirement of 8%). Earnings per share improved to 17.41 sen compared to a loss of 175.24 sen the year before.
Dato’ Zukri attributed the remarkable recovery to the aggressive implementation of the five-component turnaround plan since last September to drive the Bank’s recovery. The plan included the implementation of strategic changes to grow new businesses and an intensive loan recovery programme.
He said the effectiveness of the strategies of the turnaround plan was already felt in the first six months of FY2007, enabling the Bank to report a PBZT of RM165.8 million during that period.
“The challenge in the coming year will be to deliver stronger earnings in an environment of intensified competition. We believe the re-branding of Bank Islam as a global player, will, enable the Bank to remain competitive, and position us to take advantage of existing and new opportunities arising from the accelerated development of Malaysia as an international Islamic financial centre,” he added.
The re-branding unveiled three weeks ago, involves a vigorous exercise to change the mindset and the working culture, and the Bank’s approach to doing business in a market place that is increasingly more knowledgeable and sophisticated. It also dictates the incorporation of five core values into the Bank’s delivery system, customer service and the way business is done. These core values are leadership, dynamism professionalism, caring and trust.
In addition, the Bank is actively pursuing a strategy to grow income from fee-based products and services, mainly in treasury and corporate investment banking activities and plans to take advantage of Government incentives to encourage the deepening of Islamic financial services such as asset and fund management, which generate fee-based incomes.
“Given all these initiatives, we expect our financial year 2008 earnings to be driven by growth of our existing and new businesses,” he added.
With regards to the “carve out plan,” that has been proposed to address legacy non-performing finances, Dato’ Zukri said the due diligence process on the loans, by the relevant parties involved, are in progress. The target is to implement the plan by the end of the year.
The carve out plan is part of the Bank’s recapitalization and restructuring programme to strengthen the balance sheet. The other components of the turnaround plan are the revamp of the IT infrastructure, a cost rationalization exercise and human capital development programme; all of which are inter-complementary and progressing as scheduled.
“We will continue to make strategic changes necessary to enable the Bank to compete with the best in the industry, locally and globally, to take it to another level of growth,” he added.