BIMB Integrated Annual Report 2017

In catalysing value, Bank Islam continued to defend its asset quality through cautious and selective asset growth. Focus was also placed on driving deposits while kickstarting its digitalisation journey. Overall results were commendable with most of KPIs achieved. Net income margin remained the highest in the industry at 2.60% and gross impaired financing was the industry’s lowest at 0.93%. MANAGEMENT DISCUSSION & ANALYSIS BANK ISLAM MALAYSIA BERHAD’S PERFORMANCE REVIEW & OUTLOOK 2017 Awards • Best Sustainability and Best Advertising Campaign; Islamic Business & Finance South East Asia Awards 2017 • Most Outstanding Islamic Retail Bank; KLIFF Islamic Finance Awards 2017 • Largest Payment Volume – Islamic Debit Card Award and Highest Payment Volume Growth – Debit Co-Brand Card Award; Visa Malaysia Bank Awards • Best Customer Experience (DirectDebit); Malaysian e-Payments Excellence Awards 2017 • Highly Commended Award for Best New Product, Service or Innovation Launch; Retail Banker International Asia Trailblazer Awards 2017 • The Asset Triple A Digital Awards for Best Retail Emerging Digital Technologies; The Asset Asian Awards Best Islamic Fintech Deal • Best Islamic ESG Bank; The Assets Asian Awards 2017 • Company of the Year Award (Banking Category – GLC); CSR Malaysia Awards 2017 • Top 3 Most Popular Graduate Employer in Banking and Financial Services Sector • Top 20 in Malaysia’s 100 Leading Graduate Employers 2017 The Bank deployed a capital efficient strategy for the year to address the increase in minimum regulatory capital requirement from 8.63% in 2016 to 9.25% in 2017, and in view of the impending MFRS 9 to make loan provisions in anticipation of future losses. The capital efficient strategy includes robust risk management, driving secured financing, rightsizing of the balance sheet, continued growth of investment accounts (“IAs”) and prudent dividend policy. The Bank also stayed cautious and selective with its asset growth by implementing necessary measures in its approval processes as well as putting in efforts towards effective collection and recovery processes. Asset quality remained resilient as a result of the Bank’s continued vigilance in proactive account monitoring and prudent underwriting standards. Focus remained on the growth momentum in the retail market place via the Bank’s responsible financing agenda. Dedicated resources were allocated to increase its exposure and market share in SME segments; particularly vendor/supply chain financing. Staying defensive also meant retaining the Bank’s most valuable assets – its talent. During the year, the Bank continued to invest in talent development and career planning initiatives under the Growing our Own Timber programme. It also continued to build capability and capacity while further developing its brand as a leader in Islamic Banking that ranked Top 3 Most Popular Graduate Employer in the Banking and Financial Services Sector and Top 20 Graduate Employer for 2017, putting the Bank amongst the country’s top recruiters. As a result of the capability and capacity building programmes, a total of 216 employees obtained various professional certification in 2017. Bank Islam also geared up its digitalisation initiatives in 2017 by establishing a Digital Banking division to lead the Bank forward in targeting the millennial generation and boost financial inclusion by overcoming cost and physical barriers. On 2 August 2017, the Bank took another big leap towards digitalisation with its strategic collaboration with Cognizant, a leading global business and technology consulting firm based in US, to lay the foundation of digital banking platform across the Bank’s entire network. This will enable the Bank to apply digital technology to our products and services, bring greater accessibility to our customers, as well as improve customers’ banking experience. The Bank also partnered with Ethis Ventures Sdn Bhd, the first licensed Islamic crowdfunding platform by the Securities Commission, to drive the Bank’s social finance initiative for the underserved sectors via PROFIT BEFORE ZAKAT AND TAX (RM’000) ’16 ’17 720,412 767,053 REVENUE (RM’000) ’16 ’17 2,868,782 3,008,181 57 Overview Value Creation Accountability Financial Statements Sustainability Performance Data Shareholders Information 21 st AGM Information Management Discussion & Analysis