Corporate Update Sec 1 Business Environment Sec 2 SWOT Analysis Sec 3 Hijrah to Excellence Plan Sec 4 Optimizing Opportunities 2014 Sec 5 Managing Director s Office 1
BUSINESS ENVIRONMENT Managing Director s Office 2
ECONOMIC ENVIRONMENT Domestic Environment Malaysia economy remains resilient, though GDP growth is expected to moderate Growth will continue to come from domestic demand, supported by private consumption and fixed investment Ongoing ETP initiatives expected to support financing and capital market activities Concerns on rising household debt to GDP levels will continue Gradual reduction on oil price subsidy and the introduction of GST fiscal consolidation Inflation is expected to trend up albeit moderately and hence, monetary policy remains accommodative. International Landscape Global growth remains uncertain. QE tapering and debt limit issue in US will continue to be a drag to growth. The World Bank has revised global growth down to 2.3% in 2013 and 3.1% in 2014 Growth will come from Emerging and Developing Economies Twin deficits countries such as India, Indonesia and Turkey are in serious threat due to capital outflows. Tightening of monetary stance as well as introduction of capital control are the common policy response Managing Director s Office 3
BANKING LANDSCAPE Banking Landscape Accommodative monetary policy will remain, supported by benign inflation and moderate economic outlook Moderate financings/loans growth in tandem with the economic outlook and new macro-prudential measures introduced to address household debt NIMs remain under pressure, while financing rates are expected to stabilize Tougher economic environment may place pressure on asset quality trends Continued entry of non-bank players in the financial services space, enabled by new technologies Regulatory Environment New Responsible Financing Guidelines and regulatory reforms will result in moderating consumer loans growth Capital, funding & liquidity requirements for banks will continue to rise given the forthcoming compliance of Basel III regulations Regulators risk management expectations are more onerous than ever before Greater emphasis on transparency and consumer protection Push for risk-based pricing Managing Director s Office 4
PROFILE Managing Managing Director s Director s Office Office 5
BEST ISLAMIC BANK 2013 Source : IFN2013 Strategic Planning 6
CORPORATE INFORMATION Bank Islam was incorporated on 1 March 1983 to become Malaysia s pioneer bank to operate wholly according to Shariah principles Bank Islam was licensed under Islamic Banking Act 1983 Shareholders Number of Shares Shareholdings BIMB Holdings Berhad^ 1,155,400,000 51% Dubai Investment Group 690,196,000 30.5% Lembaga Tabung Haji 419,894,000 18.5% Issued Share Capital 2,265,490,000 100% ^ Lembaga Tabung Haji (Pilgrimage Funds Board) is deemed as the ultimate controlling shareholder of Bank Islam by virtue of its 51% controlling stake in BIMB Holdings Bhd Managing Director s Office 7
CORPORATE STRUCTURE Managing Director s Office 8
POST ACQUISITION BY BHB Up to 65% 100% Managing Director s Office 9
FRANCHISE DEVELOPMENT BRANCH NETWORK Perlis - 1 Kedah - 10 Pulau Pinang - 5 Perak - 9 Kelantan - 12 Selangor 26 Kuala Lumpur - 18 Negeri Sembilan -5 Terengganu - 5 Pahang - 9 Melaka - 4 Johor - 15 Since June 2012 New branches 9 Branch refurbishment Branch relocation Meruraya, Cyberjaya, Bukit Jelutong, Bandar Kinrara, Sibu, Taman Bukit Indah, Bandar Baru Tunjung, Sungai Buloh & KL Sentral 2 Baling & Port Dickson 5 Bandar Muadzam Shah, Bukit Damansara, Gua Musang, Lahad Datu & Mersing Ar Rahnu 2 Kubang Kerian & Kuantan BDC 2 Penang Airport & KL Sentral Labuan- 1 Sabah - 5 Region Total Central 44 Northern 25 Eastern 26 Southern 24 East Malaysia 12 Total @ Sept 2013 131 Sarawak - 6 Upcoming new set-ups target opening/completion by Dec 2013 New branches 4 Branch refurbishment Branch relocation 5 Padang Garong, Kota Bharu Senawang, N. Sembilan Sungai Petani 2, Kedah Jalan Chan Sow Lin Kota Tinggi, Pontian, Bagan Serai, Bayan Baru & Raub 2 Sri Iskandar & Jasin Managing Director s Office 10
SELF SERVICE TERMINALS ( SST ) ATM 8 CDM 4 CQM 1 SP - 1 ATM 51 CDM 30 CQM 10 SP - 4 ATM 33 CDM 17 CQM 7 SP - 4 ATM 67 CDM 36 CQM 12 SP - 4 ATM 40 CDM 17 CQM 5 SP - 0 ATM Automated Teller Machine CDM Cash Deposit Machine CQM Cheque Deposit Machine SP Statement Printer ATM 48 CDM 17 CQM 10 SP - 7 ATM -157 CDM 56 CQM 27 SP - 10 ATM 81 CDM - 37 CQM 16 SP 7 ATM 39 CDM 22 CQM 7 SP - 2 ATM 30 CDM 12 CQM 3 SP - 1 ATM 2 CDM 1 CQM 1 SP - 1 ATM 31 CDM 16 CQM 7 SP -3 ATM 31 CDM 14 CQM 6 SP -2 ATM 58 CDM 27 CQM 14 SP -4 ATM 36 CDM 14 CQM 7 SP -1 Additional to be installed by Dec 2013 = 30 Managing Director s Office 11
KEY STRENGTHS Brand Asset Quality Business Model Funding Strong brand equity, well-established franchise value & distribution network Sustained asset quality and financial soundness. Allowance coverage ratios remains healthy. Prudent consumer banking business model salary deduction from source and lending standards. Rapidly growing client base. Diversify revenue stream leveraging on universal Islamic banking license Upholding a strong CASA composition Liquidity Treasury portfolio of high quality and liquid securities Capital Relatively strong capital position. Capital consists of high quality CET 1 capital People Shareholders Strong leadership. Experienced management team with in-depth understanding of local market dynamics and regulatory developments Solid support from strong institutional shareholders Managing Director s Office 12
OPPORTUNITIES Corporate Financing Capital Market Portfolio Mix Financing Margin Innovation Technology Operational efficiency Regional Expansion Renewed focus on corporate banking. Opportunities for refinancing of conventional loans arising from the new Securities Commission Guidelines for public listed companies to qualify as Shariah counters Continuous demand for infrastructure financing to support the Economic Transformation Plan Rebalancing financing portfolio via growing non-retail and profitable retail segments. Good momentum in building customer assets in consumer and business financing. Build out multiple income streams for resiliency Securing higher retail and low cost deposits via tapping into the existing large customer base, in particular young professionals Driving innovation. Making headway in e-payments space mobile banking, debit card, etc. Continued investments to support higher business volumes and build capacity for growth Introducing cost efficient processes. Moving low value transaction to self service channels. Strengthen customer centricity via new service transformation roadmap Explore opportunities to penetrate into Indonesian market, the world s largest Muslim country Managing Director s Office 13
CHALLENGES Macroeconomics Regulatory Competition Market Volatility Credit Costs Technology Talent Macroeconomic headwinds economic slowdown/recession, mounting job cuts/ unemployment rate, pay cuts, rising inflation and the pull-down impact on disposable income. Greater regulatory intervention and oversight. The new Islamic Financial Act 2013, provides the Central Bank with adequate power to effectively respond to new and emerging risks. Heightened competition. Product set is commoditised. Price-based competitions for financings and deposits are ongoing challenges to maintain margins. Volatility in the financial markets have increased in recent months, as manifested by currency depreciation, declining equity prices, rising Government bonds yield and inflationary pressures Credit costs are expected to rise from current low base. A shock to interest rates or to employment sufficient to impair household debt servicing ability & put pressure on the banking system Rapid rate of change in technology and introduction of new channels such as social media. Modernizing IT architecture will require additional investment and resources. Limited highly experienced and knowledgeable talents, especially in specialised areas such as Risk Management, Shariah, Credit, etc Managing Director s Office 14
RECENT MACRO-PRUDENTIAL MEASURES Lower Financing-to-Value for third property purchase High risk weighted asset for property financing Prudential regulations governing credit card issuance Stringent underwriting standard for personal financing Maximum tenure for vehicle financing should not exceed nine years Cooperative Commission Cap the Debt Service Ratio of Civil Servants at around 60% Greater Transparency Disclosure of total repayment amount and total interest cost & impact of an increase in interest rate Capital Management & Capital Buffer Increase moral suasion Managing Director s Office 15
BUSINESS DIRECTION 2013 Business Model - Focus on customers with proven track record and start relationship on secured basis Drive Trade Utilization Increase trade utilization > 60% Push for Secured Financing Portfolio (Focus on Business Premises Financing, Asset Financing & CapEx requirement) Focus on Floating Rate Financing Grow Current Account Balance Cross Sell the Bank s Offering (To increase share of wallet) Strengthen Relationship Managers Capability Proactive Portfolio Management (Preventive action via close monitoring of legacy portfolio) Process & Service Enhancement (Improved turnaround time) Managing Director s Office 16
SUPPORT FROM LEMBAGA TABUNG HAJI Business Referrals (Project Financing, Trade Financing, Contract Financing, Corporate Advisory and etc) Top 5 Corporate Depositors (Average balance > RM1 bil) Sukuk Underwriting & Placement Capability (i.e. Sukuk Janamanjung) Integrated Services (i.e. SST, Uniteller Service, 68 ATMs @ LTH branches) Smart Partnership (Wakaf Development, Saudi Riyal Currency Exchange) Debit Card Services during Haj Season Branch Mergers & Rationalization 4 locations (Phase 1- Langkawi, Rompin, Kuala Pilah & Labuan) Leveraged on Government Linked Companies High Performance Initiatives Co-branding (i.e. GLIC Exhibition, Minggu Amanah Saham, Media Commercial Program) Managing Director s Office 17
CROSS MARKETING OF TAKAFUL SERVICES Credit related Takaful-plans attached to Bank Islam s financing products Mortgage Reducing Term Takaful (MRTT), Cash Line for House & Fixed Assets and Long Term House-owner Takaful (LTHT) for House Financing Group Credit Financing Takaful (GCFT) for Personal Financing and Bank Islam Card Automobile Financing Takaful Plan for Vehicle Financing Non-financing related Takaful - commonly sold on stand alone basis or on cross selling basis with Bank Islam s products Personal Accident (PA); Motor Takaful Labbaik Account-I*; *Note: Labbaik Account-i is a savings account that comes with takaful protection which allows customer to save for Haj and at the same time be protected in the event of Death or Total Permanent Disability (TPD) by paying single takaful contribution for the takaful plan. The single takaful plan also offers badal Haj worth RM3k and funeral expenses worth RM1k Managing Director s Office 18
FRANCHISE & BRAND RECOGNITIONS 2010 Managing Director s Office 2011 2012 2013 19
FINANCIAL HIGHLIGHTS Managing Director s Office 20
PROFITABILITY * 18 months Financial Period Ended Dec 2010 # 6 months Financial Period Ended June 2012 ^ Restated arising from adoption of MFRS Managing Director s Office 21
KEY FINANCIAL INDICATORS Actual June 2013 Actual FYE Dec 2012 Islamic Banking System Banking System PROFITABILITY Return on equity (%) 19.8% ^ 20.4% 19.6% * 17.5% * Return on assets (%) 1.7% ^ 1.7% 1.4% Cost income ratio (%) 54.8% 51.4% 46.1% * * 1.6% 46.6% * * ^ Annualised * Bank Negara Malaysia Annual Report 2012 Non-fund based income ratio (%) 12.1% 13.5% 11.0% ASSET QUALITY Gross impaired financing ratio (%) 1.4% 1.6% 1.5% Net impaired financing ratio - less IA & CA (%) -0.9% -0.7% -0.3% Financing loss coverage ratio (%) 163.8% 142.6% 120.3% * * 19.6% # 2.0% # # 0.0% # # 100.1 % # # Bank Negara Malaysia Monthly Statistical Bulletin @ June 2013 a Based on Basel III computation effective 1 January 2013 b Based on Basel II computation EFFICIENCY Financing to deposits (%) 62.7% 61.2% 81.4% Managing Director s Office # 79.2% # 22
ROE JUNE 2013 vs. DEC 2012 Managing Director s Office 23 The above are based on availability of the respective financial institution s latest financial statements * Combination of AmBank Group & AmIslamic
ROA JUNE 2013 vs. DEC 2012 Managing Director s Office 24 The above are based on availability of the respective financial institution s latest financial statements * Combination of AmBank Group & AmIslamic
INCOME STATEMENT RM million 6 months June 2013 6 months June 2012 Y-oY % Total income 1,092.1 915.9 19.2% Profit to depositors (379.6) (271.8) 39.6% Net income 712.5 644.1 10.6% Total overheads (390.6) (346.5) 12.7% Profit before allowance for impairment Allowance for impairment on financing and advances Allowance for impairment on investments Reversal on allowance for impairment on other assets 321.9 297.6 8.2% (1.6) (17.9) -91.1% - 0.4-3.5 1.4 157.5% Profit before zakat and tax 323.8 281.5 15.1% Zakat (4.5) (3.3) 36.9% Tax (85.8) (76.3) 12.6% Profit for the period 233.5 201.9 15.6% Managing Director s Office 25
PROFIT BEFORE TAX GROWTH ^ annualised growth Managing Director s Office 26
PROFIT BEFORE TAX GROWTH ^ annualised growth Managing Director s Office 27
NET FUND BASED INCOME RM million 6 months June 2013 6 months June 2012 Variance Financing Consumer Banking 519.3 428.8 90.5 Commercial Banking 75.1 59.1 16.0 Corporate Banking 57.2 36.3 20.4 BILOB 2.7 3.3 (0.6) 654.3 528.0 126.3 Investment & Placements 305.8 266.6 39.2 Fund Based Income 960.1 794.6 165.5 Consumer Banking (26.3) (24.5) (1.8) Commercial Banking (21.9) (18.8) (3.1) Corporate Banking (13.2) (11.4) (1.8) BILOB (0.6) (1.0) 0.4 Treasury (317.6) (216.1) (101.5) PATD (379.6) (271.8) (107.8) Net Fund Based Income 580.5 522.8 57.7 Managing Director s Office 28
NET INCOME SPREAD As at 30 June 2013 As at 31 December 2012 As at 31 December 2011 The above are based on availability of the respective financial institution s latest financial statements Managing Director s Office 29
COST INCOME RATIO TREND - Banking Group Managing Director s Office 30 The above are based on availability of the respective financial institution s latest financial statements * Combination of AmBank Group & AmIslamic
KEY BALANCE SHEET ITEMS RM million June 2013 December 2012 Growth Amount % Total Assets 40,140.1 37,450.8 2,689.3 7.2% Net financing, advances and others 21,370.0 19,508.7 1,861.3 9.5% Gross impaired financing 298.0 308.7 (10.7) -3.5% Net impaired financing (190.1) (131.6) (58.5) 44.4% Deposits from customers 34,859.2 32,583.2 2,276.0 7.0% Equity 3,256.9 3,099.6 157.3 5.1% Managing Director s Office 31
TOTAL ASSETS as at JUNE 2013 RM Billion Banking System^ Selected Banking Group # Total assets 2,013.4 40.1 536.3 292.6 289.6 117.3 6 months growth 103.9 2.7 41.4 17.8 23.2 4.4 % growth 5.4% 7.2% 8.4% 6.5% 8.7% 3.9% Market share June 13 2.0% 26.6% 14.5% 14.4% 5.8% Dec 12 2.0% 25.9% 14.4% 13.9% 5.9% RM Billion Islamic Banking System^ Selected Islamic Banks # Total assets 404.9 40.1 104.8 51.0 31.5 30.8 6 months growth 23.3 2.7 13.4 (0.3) 1.9 1.5 % growth 6.1% 7.2% 14.7% -0.5% 6.4% 5.1% Market share June 13 9.9% 25.9% 12.6% 7.8% 7.6% Dec 12 9.8% 24.0% 13.4% 7.8% 7.7% ^ based on Bank Negara Malaysia Monthly Statistical Bulletin @ June 2013 # based on latest available financial statements of respective banks * Combination of AmBank Group & AmIslamic Managing Director s Office 32
ROBUST FINANCING GROWTH RM4.96b Growth + 30.2% Growth + 9.5% Managing Director s Office 33
NET FINANCING as at JUNE 2013 RM Billion Banking System^ Selected Banking Group # Net financing 1,160.9 21.4 326.0 207.7 167.6 82.7 6 months growth 56.7 1.9 14.1 11.7 11.9 4.2 % growth 5.1% 9.5% 4.5% 6.0% 7.7% 5.4% Market share June 13 1.8% 28.1% 17.9% 14.4% 7.1% Dec 12 1.8% 28.2% 17.8% 14.1% 7.1% RM Billion Islamic Banking System^ Selected Islamic Banks # Net financing 252.6 21.4 71.2 34.0 21.8 21.7 6 months growth 19.8 1.9 9.9 1.0 1.6 1.8 % growth 8.5% 9.5% 16.2% 2.9% 7.9% 9.1% Market share June 13 8.5% 28.2% 13.5% 8.6% 8.6% Dec 12 8.4% 26.3% 14.2% 8.7% 8.6% ^ based on Bank Negara Malaysia Monthly Statistical Bulletin @ June 2013 AmIslamic # based on latest available financial statements of respective banks * Combination of AmBank Group & Managing Director s Office 34
GROSS FINANCING & MARKET SHARE TRENDS Managing Director s Office 35
GROSS FINANCING BY BUSINESS UNITS % growth June 13 vs Dec 12 Business units mix (%) Dec 10 Dec 11 Dec 12 June 13 Consumer 75.9% 75.5% 73.7% 74.7% Commercial 12.2% 12.5% 12.3% 12.4% Corporate 9.9% 10.3% 13.1% 12.1% BILOB 2.0% 1.7% 0.9% 0.8% Managing Director s Office 36
CONSUMER FINANCING DRIVEN BY PERSONAL & HOUSE FINANCING % growth June 13 vs Dec 12 Managing Director s Office 37
TARGET MARKET Product Preferred Target Market Risk Mitigation Min Salary Debt Service Ratio Others Personal Financing Package employers (salary deduction from source) Secured financing (Gold, TH, Savings, GIA, SIA) Special programme financing to: i. Mass affluent professionals ii. Medical practitioners iii. Engineers iv. Accountants Package RM2k Non Package RM3.5k Package With House Non Klang Valley Income >RM3k RM7k : 70% Klang Valley Income >RM5k RM7k : 70% NKV and KV Income >RM7k and above : 75% Package Without House Non Klang Valley Income >RM3k RM7k : 50% Klang Valley Income >RM5k RM7k : 50% NKV and KV Income >RM7k and above : 55% Fin amount capped at 30x salary Ticket size >RM50k Fin >RM150k min income RM120k p.a Non Package With House Non Klang Valley Income >RM3k & above : 65% Klang Valley Income >RM5k & above : 65% Non Package Without House Non Klang Valley Income >RM3k & above : 50% Klang Valley Income >RM5k & above : 50% Managing Director s Office 38
TARGET MARKET CONT Product Preferred Target Market Risk Mitigation Min Salary Debt Service Ratio Others House and Fixed Asset Owner Occupied Ticket size >RM250k for Klang Valley and State Capital Matured locations/well established refinancing market reputable development/developer Existing customer base with good credit record >5k Outside Klang Valley: Package and Non Package Income RM3k & below : 60% up to Klang Valley: Package and Non Package Income RM5k and below : up to 60% MOF < 80% Tenure up to 35 years Vehicle Financing Package employers Newly employed graduates Local cars RM1.5k With house 70% Income >RM7k : 75% Without house 50% Up to 9 years Net Take Home Pay a. Sub Urban RM750 b. Urban RM1,000 Bank Islam Credit Card-i Senior Management of reputable company - Corp/Comm customers (i.e. GLCs & MNCs) RM2k 70% Net Take Home Pay a. Sub Urban RM750 b. Urban RM1,000 New Customer with Balance Transfer Managing Director s Office 39
PACKAGE EMPLOYERS : GOVERNMENT & ITS AGENCIES about 62% of Personal Financing Managing Director s Office 40
PACKAGE EMPLOYERS : GLCS & NON- GLCS about 51% of Consumer Banking Managing Director s Office 41
OIL & GAS PACKAGE EMPLOYERS approximates 13% of PF portfolio Managing Director s Office 42
MARKET SHARE CONSUMER BANKING PRODUCT House & Fixed Asset Financing Personal Financing Vehicle Financing Bank Islam TOS as at Dec 2012 TOS as at June 2013 Total Islamic Banking Total Industry Bank Islam vs. Islamic Banking Bank Islam vs. Industry Bank Islam Total Islamic Banking Total Industry Bank Islam vs. Islamic Banking (RM mill) % (RM mill) % 5,593 61,723 435,294 9.06% 1.28% 6,131 6,113 27,169 55,292 22.50% 11.06% 7,072 2,477 55,888 141,116 4.43% 1.76% 2,616 71,077 465,396 27,732 56,285 60,139 146,337 Bank Islam vs. Industry 8.63% 1.32% 25.50% 12.56% 4.35% 1.79% Credit Card-i 433 1,781 33,261 24.31% 1.30% 425 1,798 32,761 23.64% 1.30% Ar-Rahnu 81 0.00% 0.00% 84 0.00% 0.00% Total Consumer 14,697 146,561 664,964 10.03% 2.21% 16,328 160,746 700,779 10.16% 2.33% Managing Director s Office 43
GROSS FINANCING: Secured vs. Unsecured & Fixed vs. Floating Rate Secured financing grew 12.0% for the 6 months to June 2013 (Budgeted target 20% p.a.) Significant shift in floating financing with the introduction of Personal Financing based on floating rate in 2012. Managing Director s Office 44
Managing Director s Office 45
CUSTOMER DEPOSITS RM6.16b Growth + 21.5% Growth + 7.0% of which Al-Awfar 1,422 4.4% of which Al-Awfar 1,435 4.1% of which Al-Awfar 156 0.5% of which Al-Awfar 96.1 0.3% Managing Director s Office 46
DEPOSITS as at JUNE 2013 RM Billion Banking System^ Selected Banking Group # Deposits 1,469.6 34.9 372.5 240.4 212.7 87.7 6 months growth 61.3 2.3 25.4 15.3 12.1 4.5 % growth 4.4% 7.0% 7.3% 6.8% 6.1% 5.4% Market share June 13 2.4% 25.3% 16.4% 14.5% 6.0% Dec 12 2.3% 24.7% 16.0% 14.2% 5.9% RM Billion Islamic Banking System^ Selected Islamic Banks # Deposits 314.5 34.9 69.6 35.4 25.4 22.5 6 months growth 8.1 2.3 (1.4) 0.2 1.7 0.8 % growth 2.6% 7.0% -2.0% 0.5% 7.2% 3.7% Market share June 13 11.1% 22.1% 11.3% 8.1% 7.1% Dec 12 10.6% 23.2% 11.5% 7.7% 7.1% Managing Director s Office ^ based on Bank Negara Malaysia Monthly Statistical Bulletin @ June 2013 * Combination of AmBank Group & AmIslamic 47 # based on latest available financial statements of respective banks
CUSTOMER DEPOSITS & MARKET SHARES TREND Managing Director s Office 48
CUSTOMER DEPOSITS 10,664 Managing Director s Office 49
CASA DEPOSITS as at JUNE 2013 RM Billion Banking System^ Selected Banking Group # CASA 375.3 12.7 127.4 67.1 60.5 18.1 6 months growth 9.7 (0.7) 5.3 1.6 4.1 2.6 % growth 2.6% -5.2% 4.3% 2.4% 7.3% 17.0% % to Total Deposit Market share 25.5% 36.5% 34.2% 31.5% 25.2% 20.7% June 13 3.4% 33.9% 17.9% 16.1% 4.8% Dec 12 3.7% 33.4% 17.9% 15.4% 4.2% RM Billion Islamic Banking System^ Selected Islamic Banks # CASA 82.45 12.72 23.26 9.25 7.57 6.94 6 months growth (0.05) (0.70) (0.26) (0.21) 0.42 1.61 % growth -0.06% -5.24% -1.11% -2.2% 5.81% 30.31% % to Total Deposit Market share 26.21% 36.50% 33.43% 26.12% 29.79% 30.89% June 13 15.4% 28.2% 11.2% 9.2% 8.4% Dec 12 16.3% 28.5% 11.5% 8.7% 6.5% Managing Director s Office ^ based on Bank Negara Malaysia Monthly Statistical Bulletin @ June 2013 * Combination of AmBank Group & AmIslamic 50 # based on latest available financial statements of respective banks
IMPROVED CREDIT QUALITY TREND Gross impaired financing ratio 12,283 Managing Director s Office 51
IMPAIRED FINANCING of which Gross Impaired Financing by Business Units: Managing Director s Office 52
IMPAIRED FINANCING RATIOS Banking Group As at 31 December 2012 The above are based on availability of the respective financial institution s latest financial statements * Combination of AmBank Group & AmIslamic Managing Director s Office 53
FINANCING BY YEAR OF APPROVAL PRE & POST JUNE 2006 TREND 12,283 Managing Director s Office 54
ALLOWANCES FOR IMPAIRMENT ON FINANCING AND ADVANCES RM million Non- Impaired 6 months June 2013 6 months June 2012 Impaired Total Non- Impaired Impaired Total individual assessment - 5.4 5.4-22.2 22.2 Total collective assessment 49.1 42.5 91.6 37.9 26.0 63.9 Total Total allowances for impairment on financing and advances 49.1 47.9 97.0 37.9 48.2 86.1 Higher collective assessment recorded in 6 months June 2013 compared to corresponding period: Gross financing have grew 29.9% y-o-y More prudent provisioning Build up of collective assessment for high risk account. Better recovery during the 6 months June 2013 was mainly due to one particular customer. Managing Director s Office 55
END-TO-END RISK MANAGEMENT MEASURES Minimum salary for tenure > 10 years increased to RM2,500. Independent validation of PF, HFA, VF and BIC scorecards by PwC. Recalibration of BIC scorecard. Underwriting Standards Control Risk-based pricing Higher pricing for longer tenure Risk-based incentives based on target market. Continued focus on Package Employers. Robust review on Package Employers financial position and industry outlook. Preventive management via X-days. Embarked on auto-dialer. Centralisation of early delinquent. Special campaign for bad debt recovered. Rescheduled active delinquents and impaired accounts. Collection Managing Director s Office 56
Managing Director s Office 57
CORPORATE MASTER PLAN/BLUE PRINT TURNAROUND PLAN SUSTAINABLE GROWTH PLAN OCT 2006 JUNE 2009 JULY 2009 DEC 2012 JAN 2013 DEC 2015 in our pursuit to be a Global Leader in Islamic Banking Managing Director s Office 58
SUSTAINABLE GROWTH PLAN ENDED BY DEC 2012 Business Innovation Managing Director s Office Robust Risk Management Strengthening Enabling Infrastructure Building Capability & Capacity Franchise Development Inorganic Growth & Corporate Expansion 59
CORPORATE MASTER PLAN HIJRAH TO EXCELLENCE Robust Organic Growth Service Excellence Shariah-led Innovation Resource Optimization Employer of Choice Regionalisation Managing Director s Office 60
H2E - PROGRESS UPDATE @ 1H2013/JUNE 2013 Robust Organic Growth Total assets grew 7.2% between June 13 and Dec 12 (Annualized 14.4%, Target for FY2013 is15% p.a.) Net financing grew 9.5% between June 13 and Dec 12 (Annualized -19.0%, Target for FY2013 is 25% p.a.) Financing to deposits ratio of 62.7% (Target for FY2013 is 65%) Non-fund based income ratio of 12.1% (Target by FY2015 is 15%) PBZT increased by 15.1% YoY from RM281.5 million to RM323.9 million (Target for FY2013 is 15% p.a.) Service Excellence Obtained highest score in the GLC Customer Satisfaction Index undertaken by Malaysia Productivity Corporation (MPC) June 2013, Putrajaya Committee s Initiative (Please refer to next page) Customer Centric & Service Transformation: Introduced paperless account opening, Establishment of Customer First Committee to enhance complaint /feedback management, Mock training branch for new front liners in reducing the learning curve, Established Service Transformation Roadmap in order to provide seamless customer service experience across all customer touch points, New branch design for Menara Bank Islam, etc. Technology-led Service Excellence: Upgraded Internet banking platform - concurrent internet banking users have increased up to 500 from 100 previously. Introduction of mobile electronic payment acceptance (mpos),etc Managing Director s Office 61
H2E - PROGRESS UPDATE CONT 7 6 7 5 Overall Quality Customization Reliability Perceived Overall Quality 3.2 Customer Expectations 2.7 1.5 77 75 75 71 DRIVERS Perceived Value Price Given Quality Quality Given Price 1.9 1. 1 7 6 OUTCOMES Customer Complaints 1.3 Customer Satisfaction 0.2 Index (CSI) 71 71 Satisfaction Ideal Confirm to Expectations 79 73 75-1.0 3.7 Customer Loyalty 21% 7 1 BIMB Customer Satisfaction Index Score BIMB CSI score was 76, score above 80 consider strong in ACSI measurement. Overall Quality Customization Reliability 76 75 74 Index Score Impact Repurchase Price Tolerance Customer Retention 76 61 76% N = 280; 90% Confidence Interval = 1.34 Managing Director s Office 62
H2E - PROGRESS UPDATE CONT Shariah-led Innovation Home financing on Inah contract ceased w.e.f Jan 13 and Tawarruq contract adopted w.e.f Jan 13 Home financing on Ijarah Muntahiya Bithamlik (IMBT) by end of FY2013 (for completed house only) Murabaha to the Purchase Orderer for vehicle financing Perfecting Istisna, Parallel Istisna Cash Waqf Resource Optimisation Harnessing Share of Wallet Cross Selling & Up Selling : Fostering and strengthening business relationships with GLCs and their group companies, top-tier corporate and listed entities Process Improvement & Optimisation : Straight-through processing via Financing Origination System (FOS), Streamline business processes, Rationalisation of Ar Rahnu business and foreign currency business, Re-organised Commercial Banking Group, EPF online verification, Outsourcing management of files and security documents, etc Cost Efficiency & High Productivity: Promote migration to e-payment, In-sourcing of Self Service Terminal, Reduction of cash-holding at branches, Participating in MEPS White Labeling ATMs, Staggered hour for Credit Administration alignment to peak processing hour. Capital Management : Risk-based pricing, RWA Optimisation, etc Managing Director s Office 63
H2E - PROGRESS UPDATE CONT Employers of Choice 2012 ranking Malaysia's 100 leading employer: Bank Islam climbed to 38 th place from 62 nd place in 2011 Top 50 for Malaysia s most preferred employers in 2012 Recruited 4 new talents under the Young Leaders Program, notwithstanding an overwhelming application of more than 2,000 candidates. Regionalisation Submitted a proposal to bid for a controlling stake in a Malaysian-controlled Shariah bank in Indonesia Managing Director s Office 64
OPTIMISING OPPORTUNITIES 2014 Managing Director s Office 65
STRATEGIC PRIORITIES HIJRAH TO EXCELLENCE OPTIMISING OPPORTUNITIES NEW FRONTIER 2013 2014 2015 Managing Director s Office 66
OPTIMISING OPPORTUNITIES STRATEGIC PRIORITIES Optimizing Returns Accelerating CASA Growth Delivering Superior Banking Experience Optimising Resource Managing Director s Office 67
BUILDINGS BLOCK Optimizing Returns Maintaining Growth Momentum Sustaining Net Income Margin Optimizing Assets Mix RAROC Balancing product mix, capital consumption & expected returns Driving Fee-based Income Harnessing Share of Wallet Main Banker for Corporate Clients Enhancing Cost Efficiency & Productivity Accelerating CASA Growth Liabilities-led business growth Cross Marketing. New KPIs for Business Divisions Deposit Product Roadmap (Shariah Contract Options - Mudharabah, Wakalah, Tawarruq & Jualah) Segmentation-led strategy (Medical Practitioners, Engineers, Pilot, Academicians, etc) Multiple point of deposit-taking channels Debit Card Co-branding for Staff Salary Account Brand refresh targeting mass affluent segment Managing Director s Office 68
BUILDINGS BLOCK cont Delivering Superior Banking Experience Services Differentiation Optimizing Branch Capability & Expanding Footprint Strengthening Electronic Channel Capability Seamless Customer Service Across All Customer Touch Points Redefine Turnaround Time Customer s Perspective : First Time of Interfacing Institutionalize Credit Decision Making Process Redesign Credit Memo Straight through Processing First-time Resolution Channel Innovation Optimizing Resource Proactive Capital Management Rightsizing of Operating Environment Culture, Behavior, Reward Alignment Reinforcing Performance Culture Technology-led infrastructure to support operational and execution capabilities Managing Director s Office 69
& Thank You www.bankislam.com.my Disclaimer: This presentation material has been prepared by Bank Islam Malaysia Berhad (the Bank ) for information purposes only and does not purport to contain all the information that may be required to evaluate the Bank or its financial position. No representation or warranty, express r implied, is given by or on behalf of the Bank as to the accuracy of the information or opinions contained in this presentation. The presentation does not constitute or form part of an offer, solicitation or invitation of any offer, to buy or subscribe for any securities, nor should it or any part of it form the basis of, or be relied in any connection with, any contract, investment decision or commitment whatsoever. The Bank does not accept any liability whatsoever for any loss howsoever arising from any use of this presentation or their contents or otherwise arising in connection therewith. Managing Director s Office 70