Strategic changes to enhance accountability and performance
KUALA LUMPUR, Friday, 15 December, 2006 – The transformation of BIMB Holdings Berhad (BHB) and its subsidiaries will be accelerated and deepened in the current financial year, as the Group goes all out to grow market share in the Islamic financial services industry.
“The momentum of the transformation programme initiated last year, will be accelerated to ensure the Group’s profit recovery in the first quarter is sustained,” Group Managing Director Dato’ Noorazman A. Aziz, told reporters after the BHB’s ninth annual general meeting today.
After two years of losses, BHB reported a profit before zakat and tax of RM42.1 million in the three months from June to September 2006, and barring any shocks BHB expects another profitable quarter ending December 2006.
The turnaround is attributed mainly to the impact of the strategic changes implemented at Bank Islam Malaysia Berhad (Bank Islam) under the transformation programme.
He added that the objectives our transformation programme are in line with the Government-linked Companies (GLCs) transformation initiatives to enhance board effectiveness, strengthen directors’ capabilities, intensify credit risk, market risk as well as operational risk management practices.
The reconstitution of the boards of BHB and Bank Islam have just been completed, under a process initiated by Bank Negara Malaysia in 2003, to address operational and control weaknesses in the Bank.
Dato Noorazman’s appointment to the board of Syarikat Takaful Malaysia Berhad (STMB) in January and as BHB Group Managing Director in June, is part of the strategic change programme.
“The BHB Board recognizes that as the key stakeholder of STMB, we have to take responsibility for the safety and soundness of the institution. And we will continue to implement whatever changes necessary to enhance the performance of not only STMB but the other subsidiaries of the Group as well,” he added.
Commenting on the outlook for Bank Islam he said:
“Yes, the huge provisions for the non-performing financing (NPF) have set the Bank back but it has recovered substantially from that last ground as a result of the aggressive measures implemented in the past six months to restructure, revamp and overhaul the weaknesses in the system that cause the Bank to slip.
Bank Islam has a good base of loyal customers and our branding, although dented, still carries a huge premium. As a result of the strategic changes, including the entry of strategic partners, the Bank is now ready to diversify its product range to include more fee-based products and services.
As our goal is to become a leading regional player in the Islamic financial services industry, our strategy would include pursuing opportunities overseas, where the industry is estimated to grow at a compounded growth rate of 20% annually, making it one of the fastest growing business in the world.
But for the moment our focus is to complete the cleaning up of Bank Islam’s balance sheet, to further strengthen our management and operational processes and systems and to maintain and enhance the Bank’s leading market position. In this regard, we will be undertaking a re-branding exercise to strengthen the brand positioning as well as remodeling our branches to improve on our service delivery, as a start.”
On Takaful Malaysia, in particular, to the unreconciled items in its accounts, he said:
“The unreconciled differences refer to banking transactions, both debits and credits, which have not been matched with the transactions on the general ledger.
We have given the auditors of Takaful Malaysia till 15 January to pin down the amount of unreconciled items as at 30 June 2006. After we know the number, the auditors and the management will then systematically reconcile the items. Until that figure is known, we would not be able to know its impact on the profits of the Group.
In line with the transformation programme, we also plan to bring in further expertise relevant to the business at the Board and senior management levels, to enhance Takaful Malaysia’s competitiveness. Although Takaful Malaysia is the market leader with an estimated 50% of the domestic takaful market, we cannot ignore the growing competition in this sector.”
On the performance and expectations of the stockbroking, unit trust and asset management divisions, he said:
“Although they are currently not major earnings contributors, they are nonetheless important members of the Group, each offering different Islamic financial products that have significant growth potential.
We believe that with the implementation of performance enhancement initiatives, their earnings will also grow in tandem.”
Dato’ Noorazman said: “Transformation processes will take time but the Board is committed to make the necessary changes at all levels to enhance accountability and performance.”
“Our goal is that at the end of the day, BHB would be a fully integrated Islamic financial services provider, offering customers everything to meet their financial-related needs, from cradle to grave,” he added.