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Bank Islam Posts 56.2% Jump In Half-Year PBZT During The First Six Months Of 2011

Highlights for the 6-month period under review:


  • Half-year PBZT growth of 56.2% amounting to RM240.9 million
  • Robust annualised net financing growth of 16.1% to RM12.8 billion
  • Total customer deposits amounted to RM24 billion of which CASA accounted for RM10.7 billion. The CASA-to-deposits ratio improved further to 44.3% from 39.7% as at end-December 2010.
  • Continuous improvement to asset quality
    • Net impaired financing totaled RM118 million as at end-June 2011 compared to net non-performing financing (NPF) of RM371 million as at end-June 2010, an improvement of 68.2% YoY or RM253 million
    • Net impaired financing ratio stood at 0.9% as at 30 June 2011 vs. net NPF ratio of 3.2% as at 30 June 2010
  • Strong capital adequacy ratio at 16.6%

KUALA LUMPUR, Thursday, 25 August 2011 – Bank Islam Malaysia Berhad (“Bank Islam” or “the Bank”) continued with its sterling set of results, announcing today profit before zakat and tax (“PBZT”) of RM240.9 million in the first half of the financial year 2011 (1HFY2011), equivalent to a 56.2% jump compared to the corresponding period a year ago.

Managing Director Dato’ Sri Zukri Samat, in a statement, attributed the impressive achievement to a strong financing growth; continued improvement in asset quality; fast-growing contribution from non-fund based income and the ability to attract and retain lower cost core customer deposits, namely current and savings accounts (“CASA”). In view of the solid financial performance for the financial period ended 30 June 2011, he also announced that the Board of Directors has approved a gross interim dividend of 2.63% per share, which will result in a dividend payout of RM44.7 million (net of tax).

The remarkable financial showing during the financial period under review translated into a gross Return on Equity (“ROE”) of 18.2% (end-Dec 2010: 16.5%) and a gross Return on Assets (“ROA”) of 1.7% (end-Dec 2010: 1.2%) as at end-June 2011. The 0.5 percentage point hike in ROA to 1.7% in 6 months is the upshot of the Bank’s continuous exercise of balance sheet reshaping, focusing on better product mix and competitive funding cost to maximise returns.

Dato’ Sri Zukri also said he was particularly satisfied with the strength of the Bank’s capitalisation ratios. As at end-June 2011, Bank Islam’s Risk-Weighted Capital Ratio (RWCR) stood at 16.6% (end-Dec 2010: 16.8%), above the Islamic banking industry’s average of 15.2%. Even after taking into account the proposed interim dividend payout, the Bank’s RWCR would still remain robust at 16.3%. In the same vein, the Bank’s Tier 1 Core Capital Ratio was at healthy levels of 15.4% as at end-June 2011.

Both types of income, namely fund-based and non fund-based experienced a sharp double-digit growth during the 1HFY2011 compared to the corresponding period a year ago – gross fund-based income by 13.5% while non fund-based income by 72.1%. Net financings expanded by 16.1% to reach RM12.8 billion as at end-June 2011, paving the way for a 14.4% increase in income on financing assets, with consumer financing remaining the key contributor. Higher foreign exchange and mark-to-market gains on derivatives transactions as well as increased collection of fees and commissions with the introduction of new products such as Transact At Palm (TAP) Mobile Banking-i and Visa Debit Card-i were the major drivers of the sharp rise in non fund-based income during the 1HFY2011. As a result, the non fund-based income accounted for 12.2% of the Bank’s total income as at end-June 2011, a significant increase from just 10.8% as at end-December 2010.

Notwithstanding the vigorous expansion in the financing portfolio, the Bank’s asset quality enhancement remained in progress. Indeed, the Bank’s net impaired financing amount plunged 68.2% to RM118 million as at 30 June 2011 compared to RM371 million in terms of net non-performing financing (“NPF”) amount as at 30 June 2010. At 0.9%, the Bank’s net impaired financing ratio dropped to below the 1%-threshold for the first time, in contrast to the net NPF ratio of 3.2% as at 30 June 2010.

The composition of customer deposits continues to reflect the Bank’s balance sheet reshaping exercise whereby the CASA-to-total deposits ratio is maintained at above industry levels. Customer deposits totaled RM24 billion as at end-June 2011, of which 44.3% comprised CASA, a significant improvement from 39.7% as at end-December 2010. Consequently, Bank Islam’s financing-to-deposits ratio rose by almost 10 percentage points to 55.1% as at end-June 2011 vs. 45.7% as at end-December 2010.

Moving forward, to further consolidate its position as Malaysia’s largest Islamic banking franchise, Bank Islam plans to open at least two new branches in the second half of 2011, bringing its nationwide branch network to more than 120 branches, consistent with its long-term target of having 150 branches by 2015. On the same token, Bank Islam also aims to open two new outlets for its microfinance business during the final six months of 2011 to better tap the huge potential of the underserved Ar Rahnu market.

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