In this interview deputy CEO of Bank Islam in Malaysia, Khairul Kamarudin, talks about the challenges Bank Islam had to face during the years. The bank had heavy losses in 2005 and 2006 and had to manage the misconceptions of the public as well. Today, Bank Islam’s customers have grown to more than 5 million. The bank was one of the four founding Islamic banks to form a consortium that launched the Investment Account Platform (IAP) in 2015. The IAP platform facilitates direct investment by investors into viable ventures of their choice. Bank Islam is involved in several social projects and foundations, like the Projek Bantuan Rumah (Housing Aid Project) and Promoting Intelligence, Nurturing Talent and Advocating Responsibility (PINTAR) Foundation.
After the listing of RHB Bank, attention is now on whether BIMB will do the same with Bank Islam Malaysia. Bank Islam is the oldest and largest standalone Islamic bank in Malaysia with an asset size of RM55.46 bn as at March 31. It also owns a 59.9% stake in insurer Syarikat Takaful Malaysia, while its other core business is BIMB Securities. BIMB, in turn is 53.6% controlled by pilgrim fund Lembaga Tabung Haji (LTH). It is believed that the bank still holds the dream to move into the big league and grow market share. However, it will not be able to achieve mega Islamic bank dream unless it mergers.
Malaysia is adapting to fintech revolution by adjusting its financial regulatory guidelines with an Islamic angle. According to Muhammad bin Ibrahim, governor of the Central Bank of Malaysia, the recent Islamic finance initiative could be the next game changer. The Investment Account Platform (IAP) is a platform that connects lenders, banks and enterprises seeking funds, one that could shift the role of Islamic lenders to investment intermediaries. Serving as a central marketplace to finance small and medium-sized enterprises (SMEs), the IAP was launched by six Malaysian Islamic banks: Affin Holdings, Bank Islam Malaysia, Bank Muamalat Malaysia, Maybank Islamic, Bank Kerjasama Rakyat Malaysia and Bank Simpanan Nasional.
Bank Islam #Malaysia has denied rumours that its managing director Zukri Samat would be replaced. Chairperson Zamani Abdul Ghani said the board had decided to renew Zukri’s service contract. His re-appointment has also been approved by Bank Negara Malaysia. Zamani expressed hope that Bank Islam’s staff would continue to give their full support to Zukri.
Bank Islam Malaysia Bhd (BIMB) expects slower growth in 2016 compared to last year amid the current economic challenges, according to managing director Datuk Seri Zukri Samat. He said he hoped the bank will maintain double-digit growth in terms of financing performance as achieved last year. Asked on plans to open more Bank Islam branches this year, Zukri said the bank was still assessing the current economic situation. He said the bank was eyeing 600,000 payWave debit cards issued in 2016, up from 200,000 cards issued by end-December 2015. Zukri said the bank had invested millions of ringgit in the “E-donation” Terminal Using Visa PayWave programme, and aims to provide these terminals to 10 mosques nationwide, including in Sabah and Sarawak.
BIMB Holdings Bhd's wholly-owned unit, Bank Islam Malaysia Bhd, has issued the second tranche of the Subordinated Sukuk Murabahah amounting to RM400 million under the Subordinated Sukuk Murabahah Programme. The sukuk's tenure will be 10 years, with non-callable five years, and the maturity date will be Dec 15, 2025. The proceeds shall be used to finance Bank Islam's Islamic banking activities, working capital requirements and other corporate purposes and/or, if required, to redeem any outstanding Subordinated Sukuk Murabahah issued under the Subordinated Sukuk Murabahah Programme. The sukuk was rated 'A1/stable' by RAM Rating Services Bhd.
BIMB Holdings Bhd’s wholly-owned subsidiary Bank Islam Malaysia Bhd has issued the second tranche of the Subordinated Sukuk Murabahah amounting to RM400 million under the Subordinated Sukuk Murabahah Programme. BIMB said the second tranche has a tenure of 10 years non-callable five years, with its maturity date being Dec 15, 2025. The sukuk has been rated A1/stable by RAM Rating Services Bhd. The proceeds will be utilised to finance Bank Islam’s Islamic banking activities, working capital requirements and other corporate purposes and/or, if required, to redeem any outstanding Subordinated Sukuk Murabahah issued under the Subordinated Sukuk Murabahah Programme.
Shariah- based funding is available now to support viable green technology projects, says Bank Islam Malaysia Bhd Managing Director Datuk Seri Zukri Samat. He said the bank would use every opportunity to promote Shariah-based financial products and services for project financing transactions, in line with the government's aim of establishing Malaysia as a leader in Islamic finance. Zukri said Bank Islam had completed the project financing transaction exercise for Kerian Energy via the syndicated Islamic financing facilities of RM121.44 million under the Shariah principle of Tawarruq. He also said the bank was looking towards re-balancing its consumer banking and corporate banking portfolio at a ratio of 70:30 by year-end.
Bank Islam Malaysia Bhd, which has a 26% corporate and commercial banking portfolio, is looking to raise the figure to 30% by end-2015 to reduce its dependency on consumer banking from 74% to 70%. It is looking to further tap the green technology sector, particularly hydropower projects, as well as the infrastructure sector, to up the commercial banking contribution. Managing director Datuk Seri Zukri Samat noted that the bank intends to focus on organic growth for the time being, even as it looks into the possibility of a merger and acquisition (M&A) beyond 2017. He also said Bank Islam’s overall financing growth is expected to be lower for its financial year 2015.
Bank Islam Malaysia Bhd expects a moderate and slower performance in 2015 with assets to grow at 10% and financing at 15% due to the current economic challenges. The consumer market sector has been noticeably slowed down, especially with the guidelines of the introduction of responsible financing by Bank Negara (Malaysia), Managing Director Datuk Seri Zukri Samat said. Bank Islam, which currently has 142 branches nationwide, will open eight more branches, including in the rural areas by year-end, he added after presenting RM12.74 million in business tithe to Minister in the Prime Minister's Department Datuk Seri Jamil Khir Baharom in Kuala Lumpur. At the same event, Bank Islam introduced 'Mudah Zakat', a multi-channel tithe payment system to improve tithe management efficiency.
BIMB Holdings Bhd is expecting a 15% growth in assets for its banking arm Bank Islam Malaysia Bhd for 2015, despite saying that it will be a very challenging year for the banking industry. Hizamuddin Jamalluddin, chief strategy officer of the managing director's office, said the expected asset growth is based on the group's current balance sheet. He added that in terms of loan growth, the group is expecting this year's growth to be similar to that of last year's. Hizamuddin was speaking to reporters during BIMB's launch of three new term investment accounts under the Islamic Financial Services Act 2013 (IFSA). The three products launched are the Special Investment Account Mudarabah, Waheed Investment Account Wakalah, and the Al-Awfar Account.
Malaysia Building Society Bhd (MBSB) has not initiated any new merger discussions with any organisation after the deal with CIMB Group Holdings Bhd and RHB Capital Bhd fell through. President and chief executive officer Ahmad Zaini Othman reaffirmed that MBSB has not received the green light from its shareholders to talk to any financial institution on a potential merger and acquisition. Meanwhile, Ahmad Zaini signed a Memorandum of Understanding (MoU) on behalf of MBSB with Credit and Debt Management Agency (AKPK). The MoU will enable MBSB to participate in AKPK’s debt management programme, which will see the latter extending its services.
A plan is being floated on a “marriage” between Malaysia Building Society Bhd (MBSB) and Bank Islam Malaysia Bhd. Sources say the idea of a merger between the two is being mooted at the shareholder level of both companies, namely the Employees Provident Fund (EPF) and Lembaga Tabung Haji (LTH). A common factor the two companies have is Tan Sri Samsudin Osman, who is chairman of EPF and BIMB Holdings Bhd – Bank Islam’s listed parent company. BIMB wholly owns Bank Islam, which is its main income generator. Bankers say that if a merger is to take place, the EPF would be able to vote, unlike the situation in the failed merger with CIMB and RHB.
Bank Islam Malaysia expects a 20 per cent growth in its financing activities this year, says Managing Director, Datuk Seri Zukri Samat. He said this would be slightly lower compared with the 25 per cent growth registered last year. Zukri added that this was probably impacted by some of Bank Negara Malaysia's measures to slow down the debt growth in the household sector. On its aim to become Malaysia's first mega Islamic bank, he said the bank was open to any merger and acquisition proposal but is not in talks with any party at this point in time. Towards this end, he said the bank was looking for synergies to complement the areas that the Islamic bank is lacking, for instance, corporate banking.
Maybank Islamic Bhd has dimissed speculations that it is in talks with Bank Islam Malaysia Bhd over a potential merger and acqusition (M&A). Its chief executive officer Muzaffar Hisham said the proposed merger of three local financial institutions to create a mega Islamic bank has not prompted Maybank Islamic to rush into M&A for expansion. Muzaffar said Maybank Islamic will continue to focus on its key objective, namely humanising financial services, which has been the driver of the bank’s outstanding track record over the last three to four years. Meanwhile, Muzaffar said Maybank Islamic is optimistic of maintaining its growth momentum in the second half of the year after recording an encouraging performance in the first half.
BIMB Holdings Bhd’s net profit for the second quarter ended June 30 increased 86.4% to RM129.67mil from RM69.58mil a year ago. The banking group's revenue for the period rose 3.8% to RM734.59mil while earnings per share (EPS) for the period stood at 8.68 sen. For the second-half period, the group said as a result of the acquisition of the 49% interest in Bank Islam Malaysia Bhd, the net profit attributable to the shareholders increased by RM109.4mil or 76.1%. Consequently, the EPS for the period under review also increased by 25.8%. To attract deposits, BIMB said greater focus would be placed on individual and retail deposits with new product features.
Malaysia's largest Islamic bank, Bank Islam Malaysia Bhd, is revising its base financing rate (BFR)to 6.85% per annum from 6.6% per annum effective Friday. Bank Islam in a statement on Thursday said the revision is in line with Bank Negara Malaysia's recent move to increase the overnight policy rate (OPR) by 25 basis points to 3.25%. The last revision in Bank Islam's BFR was on May 16, 2011, when the rate was revised from 6.3 % to 6.6%.
Bank Islam Malaysia Bhd is targeting to achieve a total of 140,000 savings and investment accounts with total deposits of RM500 million in its next Al-Awfar campaign. The campaign will likely be held in the second half of this year until year-end. Following this, the bank would have a total of one million Al-Awfar accounts with total deposits of RM2.5 billion. For the next Al-Awfar campaign, more than half a million ringgit is planned to be spent on advertising and promotion. To participate, new customers are required to open accounts with a minimum deposit of RM1,000 while existing Al-Awfar account holders can top up with a minimum deposit of RM1,000. Depositors have to maintain a minimum balance of RM1,000 in their accounts at all times for a four-month period to entitle them to take part in the campaign.
Bank Islam Malaysia Bhd will spend more than RM5 million this year on its corporate social responsibility (CSR) programmes to cater for various segments of society nationwide. The CSR programmes planned this year include housing projects for the needy in Johor, which involved the rehabilitation and construction of houses for 22 families costing more than RM4 million. So far, the bank has built or rehabilitated houses for more than 151 improverished families in Kelantan, Terengganu, Kedah, Pahang, Perak and Sarawak. The bank is also looking to extend its CSR activities in Sabah as there is still a need for houses for the poor as well as basic infrastructure like surau and others.
Bank Islam Malaysia Bhd has reiterated its interest in the Indonesian Islamic banking market despite previous attempts at penetrating the world’s largest Muslim country seeing a dead-end. Managing director Datuk Seri Zukri Samat said Indonesia possessed tremendous prospects as the country, with a population of 240 million, is still underserved in the Islamic banking sector. Islamic banking penetration in Indonesia is about 3% to4%, whereby Malaysia is between 23% and 24%. There is a huge Muslim population in Indonesia but Islamic banking penetration is very low, certainly there is a lot of business opportunity there, he said.