KUALA LUMPUR, FRIDAY [27 October, 2006]: BIMB Holdings Berhad (BHB) registered a net loss of RM1.230 billion for the financial year ended 30 June 2006 but expects the group-wide restructuring programme currently underway to turn BHB Group around in the current year.
In announcing its results to Bursa Malaysia today, BHB said the financial and operational restructuring initiated during the year as its subsidiary, Bank Islam Malaysia Berhad (Bank Islam), involved a cash injection of RM1.014 billion and improvements to Bank Islam’s credit and risk management framework to enhance controls and efficiency.
These measures have begun to impact Bank Islam’s operations positively and with the cash injection completed last week, Bank Islam’s restructuring is in full swing, Group Managing Director Dato’ Noorazman A. Aziz, said in a statement issued here today in conjunction with the release of its financial results.
For the FY2006, BHB Group reported a higher income of RM1.135 billion from investment of depositors’ and shareholders’ fund during the year, with the bulk of the income generated by Bank Islam. However, Bank Islam also took a one-off provision of RM1.482 billion in line with its prudent and more stringent provisioning policy. This resulted in a Group net loss of RM1.230 billion for FY2006.
Bank Islam’s capital adequacy has since been rectified by the capital injection from Dubai Investment Group (DIG), United Arab Emirates and Lembaga Tabung Haji (LTH), giving them a 40% and 9% stake in the bank, respectively. BHB now holds 51% of Bank Islam.
Dato’ Noorazman said: “BHB is pleased to have DIG and LTH as our partners in the revamped Bank Islam. We see LTH providing huge synergies in the domestic market and DIG providing a bridge to one of the fastest growing economic regions in the world, both of which would boost Bank Islam’s earnings recovery.”
“Together with our shareholders, we share a common objective of helping Bank Islam to become a leading domestic and international player in the Islamic banking sector. Efforts towards this goal will be stepped up in the coming months,” he added.
Commenting on the rest of the Group’s operations, Dato’ Noorazman said: “The other subsidiaries involved in takaful and retakaful, securities and asset management, and unit trust will undergo similar transformation i.e. to streamline policies, tighten financial controls and improve operational processes to enhance their earnings contributions.
For the FY2006, Syarikat Takaful Malaysia Berhad reported an income of RM176.492 million and a profit of RM34.360 million, while BIMB Securities Sdn Bhd contributed RM8.225 million to income and RM2.393 million to profit.
These subsidiaries have strong branding and market share individually. But their potential as a Group have not been tapped. For instance, there are plenty of opportunities from cross-selling of products and other operational synergies which can be harnessed to improve efficiency, thereby increasing BHB’s competitiveness in the market place,” he added.