BIMB Integrated Annual Report 2017

Samat for having anchored the Group in solid fundamentals and building a strong culture of integrity and responsiveness. Together with BHB’s management and staff, the Board is determined to uphold the standards set and continue the Bank’s journey towards greater excellence. I would also like to express the Board’s appreciation to our exemplary outgoing directors, Datuk Zaiton Mohd Hassan who retired on 2 February 2018, and Encik Zahari @ Mohd Zin Idris who retired on 17 May 2017. From my conversations, I have been made aware that Datuk Zaiton’s exacting standards and thoroughness has inspired greater diligence within the Board and Encik Zahari’s vast experience has been a source of great support. I am sure I speak for all my colleagues on the Board of BHB and its subsidiaries in saying their presence will sincerely be missed. I also take this opportunity to thank the Malaysian government and regulatory authorities, in particular Bank Negara Malaysia (“BNM”) and the Securities Commission, for consistently thinking ahead and putting in place strong sustainable frameworks and infrastructure for the Islamic finance industry. It is through their efforts that Malaysia continues to enjoy a global lead in Islamic finance. My gratitude extends to my fellow directors, the members of the Group’s Shariah Council and to our diligent and hardworking employees as well, for their contribution to the Group’s growth. Finally, on behalf of the Board, I sincerely thank our shareholders and diverse stakeholders for their strong support and loyalty. Thank you, TAN SRI HAJI AMBRIN BUANG Chairman (appointed w.e.f. 2 February 2018) engagement and strategic understanding of the Group’s Value Creation journey. This benefits not just our external stakeholders but also the BHB family as it has ensured greater strategic alignment and synergy moving forward. The Group also intends to continue to stay focused on a strong risk management discipline, experienced credit team and high- quality portfolio. These have helped us maintain strong credit performance and will continue to do so. Within a low loan growth environment, the expected increase in base lending rate (“BLR”) and the Malaysia Financial Recording Standard 9 (“MFRS 9”) are expected to make an impact in the coming year. MFRS 9 is a new accounting standard which will come into effect this year and has a significant impact on banks. The new standard requires banks to make provisions in anticipation of future losses rather than the current practice of making provisions only when loans have been classified as impaired. Apart from the adoption of MFRS 9 in 2018, the Net Stable Funding Ratio (“NSFR”) requirement is another major regulatory change for banks including our Islamic banking arm. To be implemented by 1 January 2019, NSFR is a liquidity standard that requires banks to maintain a stable funding in relation to the composition of their assets and off-balance sheet activities. This could potentially lead to higher funding costs, lower margins and higher lending rates. In anticipation of this major change, the Group has outlined core strategies to address these new regulations. More details on 2018 Strategic Journey on page 64 of the MD&A. ACKNOWLEDGEMENT I take this opportunity to express the Board’s gratitude and appreciation to Tan Sri Samsuddin Osman and Dato’ Sri Zukri Moving forward, the Group continues to stay focused on a strong risk management discipline, experienced credit team and high-quality portfolio. These have helped us maintain strong credit performance and will continue to do so. 27 Overview Value Creation Accountability Financial Statements Sustainability Performance Data Shareholders Information 21 st AGM Information Management Discussion & Analysis