Bank Islam posts lower profit of RM105m

By Dafizeck Daud
Bank Islam Malaysia Bhd has registered a lower profit before zakat and tax (PBZT) of RM104.7 million for the half year ended Dec 31, 2008 (1H09) compared wit h RM182.3 million in the previous corresponding period. The reduced PBZT was posted on the back of a higher revenue of RM625.8 million against RM579.5 million in 1H08.
Profit before provisions (excluding one-time IT write-off) for the period reviewed rose 11.3% to RM184.9 million.
Reviewing the results, Bank Islam managing director Datuk Zukri Samat said the bank remains on track to achieve the goals of its transformation programme, noting that the performance was satisfactory given the significant challenges resulting from the global financial and economic crisis.
Zukri attributed the revenue increase to the sustained growth in quality financings in particular consumer banking asset portfolio and the expansion of Bank Islam's deposit taking business, in particular current and savings accounts.
Non fund-based income also rose following the bank’s efforts to increase contribution from this segment, including those from wealth management and Bancatakaful business.
Its first structured investment product, An-Najah, attracted a total subscription of RM353 million within the first four weeks after its launch.
"The bank's capital position remains satisfactory with the group's risk-weighted capital ratio (RWCR) at 13.1%, in line with the domestic banks' industry average of 12.6% and above the statutory requirement of 8%," Zukri said.
Bank Islam's net non-performing financing (NPF) ratio dropped from 7.8% in June 2008 to 6.4% in December 2008, the lowest since 2005, while the financing loss coverage ratio improved further to 80.5% from 75.8%.
Financing assets for the six months reviewed rose to RM9.51 billion from RM9.06 billion in June 2008. Consumer financing portfolio in 1H09 comprised 62% of the financing assets, while corporate and commercial financing assets stood at 24% and 14% respectively.
Customer deposits rose in 1H09 to RM20.95 billion, following the introduction of new savings and deposit products to increase the bank's market share of domestic deposits. This gave the bank a financing-to-deposit ratio of 52.5% as at December 2008.
During the period under review, Bank Islam added three new branches in Kelana Jaya, Ampang and Sandakan and opened a bureau de change outlet at the KLIA Low Cost Carrier Terminal in Sepang.
"Consumer financing will remain a key business for Bank Islam, with increased focus on the more profitable segments. At the same time, plans are being executed to accelerate growth in other business segments for a more diversified financing asset base," said Zukri.

(This story appeared in The Malaysian Reserve on Mar 3, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)