BIMB Integrated Annual Report 2017

Nurturing potential champions Strategic networking Performance measurement Enhanced disclosure In this regard, the Value-Based Intermediation or VBI was conceived through the Bank Negara Malaysia’s (“BNM”) strategic paper which was published in mid-2017. The VBI has been identified as a key driver in strengthening the roles and impact of Islamic finance moving forward. Thus, the next era of growth for the domestic industry will deepen Islamic finance’s roots in creating social justice and promoting a value-based economy through higher order of integrity, inclusivity and sustainability. As the only Islamic Financial Holding Company (“IFHC”) approved by the BNM under the Islamic Financial Services Act 2013, BIMB Holdings Berhad (“BHB” or “the Group”) plays a pivotal role in this national aspiration. This spurs the Group’s focus on ‘Catalysing Value Creation’ where growth will be driven by long-term and wider objectives (prosperity, people and planet); where performance measurement considers both financial and non-financial aspects; and where innovation will be the tool in creating values for all. These will be underscored by exemplary governance and more meaningful and active engagement with the key stakeholders. The total insurance and takaful in Malaysia has shown a growth of around 4% for year 2017 (based on Q3 2017 results), a tad higher from of 3.80% in 2016. Indeed, the takaful industry has benefited from the growth of Islamic banking in Malaysia. For example, the growth of Islamic mortgage business has enabled the growth of credit-related takaful business. As BNM is targeting local Islamic banking to have a 40% market share by 2020, the takaful industry is set to grow in tandem. It is expected that the market will continue to register growth in 2018, and the takaful sector will continue to outperform the conventional insurance sector. During the year, the BNM has officially launched a new initiative with Industri Perlindungan Tenang . The programme aims to reach out to the underserved market, particularly for B40 households/ first time insurance buyers and microenterprises. Insurers and takaful operators are developing new products with changes to distribution, underwriting, claims administration and other ongoing operations and servicing requirements to ensure these products are affordable, accessible as well as easy to understand. The industry will also be embarking on commission free critical illness and medical & health insurance via direct channels. Therefore customers will have more choices of coverage in year 2018, and it is expected that the industry will continue to invest in digital platforms, in conjunction with BNM’s LIFE framework requirements and effort to drive Malaysia towards a cashless society. Strategic initiatives under the LIFE Framework will continue to drive growth and change the landscape of the insurance and takaful industry. Under the LIFE framework, the industry will implement the Balanced Score Card (“BSC”) in year 2018 as a remuneration basis for agents. It is expected that the BSC shall drive agents to serve the customers more professionally. Similarly, the BSC remuneration will be implemented for bancassurance/ bancatakaful advisory products in 2019. Developments in domestic securities sector Global and domestic economic conditions, corporate earnings growth aswell as interest ratemovements have beenundoubtedly challenging to the equity market. After three consecutive years of net foreign outflow totaling RM28.9 billion from the Malaysian equity market, foreign investors have turned into a net buyer amounting to RM11.1 billion in 2017. The FBMKLCI also surged to 1,796.81 points, closing the year by more than 150 points. Similarly, market volume throughout the year was higher at 641 billion shares from the preceding year of 433 billion, reflecting strong interest in the markets. Despite that, the ongoing competition within the industry, lower brokerage rates from the e-broking business as well as institutional business and the increase in cost of doing business would persistently pose a major hurdle to the stock broking business. Underpinned Thrusts for VBI Enabling Environment for VBI Best conduct CORPORATE VALUE INTENT Good self-governance Entrepreneurial mindset Community empowerment 51 Overview Value Creation Accountability Financial Statements Sustainability Performance Data Shareholders Information 21 st AGM Information Management Discussion & Analysis g