A net profit of RM118.1 million was declared by Bank Islam Malaysia Berhad (Bank Islam or the Group) for the three months that ended on March 31, 2023 (1Q2023), an increase of 11.5% from the same time in 2022.

In a Bursa Malaysia filing on Tuesday (30 May), Bank Islam said the revenue for the  quarter rose 42.6% to RM1,103.9 million versus RM774.0 million previously. The Group’s  net income improved due to higher non-fund-based income, which surged by RM60.0  million or 132.4%, driven by higher investment income and net gain from foreign  exchange transactions.

This performance translates into earnings per share of 5.33 sen and annualised net  return on equity of 7.0%.

Gross financing grew by 10.7% year-on-year to RM66.2 billion, while customer deposits  and investment accounts stood at RM77.8 billion, with a year-on-year increase of  RM9.7 billion or 14.3%. This was mainly attributable to the healthy year-on-year growth  of 25.9% or RM6.8 billion in total current and saving accounts and transactional  investment accounts (CASATIA), to stand at RM33.0 billion. This composition made a  healthy level of 42.5% of total customer deposits and investment accounts. The  Group’s Total Capital Ratio remained strong at 21.2%.

Bank Islam Group Chief Executive Officer, Mohd Muazzam Mohamed, said, “As at the  end of March 2023, Bank Islam’s total assets stood at RM92.1 billion, with a year-on year growth of 14.4%, driven by year-on-year growth in both financing and investment  securities.”

“Our healthy capital and liquidity position reflects that our growth momentum and  fundamentals remain strong,” he added.

As of 31 March 2023, the gross impaired financing ratio was 1.37% which remains  better than the industry average of 1.75%.

Economic Outlook

Overall, the Malaysian economy is off to a strong start when the country’s Gross  Domestic Production expanded by 5.6% during 1Q2023 as indicated in Bank Negara  Malaysia’s Quarterly Bulletin for First Quarter 2023 issued on 12 May 2023, surpassing its  regional neighbours such as Indonesia, China, Vietnam and Singapore, suggesting  that 2023-year performance target of between 4.0% and 5.0% is plausible. Such  growth is buoyed by resilient domestic spending, given solid private expenditure and  a further improvement in the labour market conditions. This bodes well for the Group’s  prospects, which are primarily in retail banking.

While the current economic indicators paint an optimistic picture for the rest of the  year, the second half of the year remains challenging as the economy is still subject  to external development risks, such as dimmer global growth prospects. Though the  Malaysian economic growth in the upcoming quarters are anticipated to come in  lower, it is believed that several upside risks could counterbalance the 2H2023 growth  headwinds, including the positive spillover from China’s economic reopening, further  improvements in the labour market and the continuation of megaprojects.

Earlier this month, Bank Islam was recognised by the General Council for Islamic Banks  and Financial Institutions (CIBAFI) for its Sustainable Development initiatives, including Environmental, Social, and Governance (ESG) Practices, at the CIBAFI Award 2023  held in Manama, Bahrain.

Mohd Muazzam said, “This recognition is a testament to Bank Islam’s progress in  integrating sustainable development mindset and ESG practices within our  operations. We have also integrated ESG considerations into our financing and  investment decisions, ensuring our activities promote sustainable economic growth  and development.

“We have taken significant steps towards reducing our carbon footprint and  minimising our environmental impact. We have adopted green energy solutions in our  operations. We are working on a Climate Risk Framework to help us identify  opportunities for ESG initiatives and improve our skills to manage associated risks.”

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