RM13.4 - Affin Islamic Bank Berhad

CHAIRMAN’S
STATEMENT
PROFIT BEFORE
ZAKAT AND TAXATION
(PBZT)
TOTAL ASSETS
RM13.4
RM117.4
billion
million
JEN. TAN SRI DATO’ SERI ISMAIL
BIN HAJI OMAR (BERSARA)
Chairman
DEAR SHAREHOLDERS,
It gives me pleasure to present the financial and operational highlights of
AFFIN ISLAMIC, given the Bank’s very encouraging performance within
a challenging economic environment that faces the financial industry in
Malaysia.
Affin Islamic Bank Berhad (709506-V) | Annual Report 2015
The Board of Directors is committed to ensure the Bank continues to grow
from strength to strength, building on its fundamentals in order to ensure its
long-term sustainability and steady returns to stakeholders. Since the Bank
was established in 2006, we have kept a keen eye on its progress and been
pleased not only by its financial scorecard but also with increasing market
awareness of the brand and its reputation as an Islamic bank that keeps
innovating to introduce Shariah compliant products that appeal to the various
segments of the market.
14
We are also committed to play our role in advancing Islamic banking
more generally within the local financial landscape. In 2015, we made a
quantum leap in this direction when AFFIN ISLAMIC joined forces with five
other Islamic banking institutions to form a consortium offering an Islamic
Account Platform (IAP). Through the IAP, we will be presenting investment
opportunities in local businesses and entrepreneurs that have been riskassessed by the participating banks. We also see the IAP as presenting a new
medium to facilitate greater public-private partnerships in financing strategic
ventures within specific industries. It is also envisaged for IAP to be eventually
positioned to facilitate fund intermediation across borders.
Along with enhanced governance in the Islamic banking sector, we believe
that Islamic financial institutions in general are better positioned to meet the
requirements of the market. AFFIN ISLAMIC in particular has been focusing
intently on fulfilling both the investment and financing needs of our growing
customer base.
“Our total assets grew 5.2% to RM13.4 billion
and profit before zakat and taxation (PBZT)
increased by 28.1% to RM117.4 million.”
As a result, I am pleased to share that the Bank has grown our assets by
5.2%, increased our profit before zakat and taxation (PBZT) by 28.1% to
RM117.4 million, and our earnings per share to 23.5 sen compared to 18.5
sen in 2014.
In addition to increasing our shareholder value in financial terms, the Bank has
also been working assiduously to grow our market reputation and integrate
ourselves more fully into local communities via a series of community outreach
programmes and zakat (business tithes) contributions. These initiatives are
undertaken not out of a sense of obligation but because we truly believe that,
by giving back to the communities that surround us, we are building our brand
thus increasing the intrinsic and long-term value of the Bank.
In 2015, AFFIN ISLAMIC contributed a total of RM5.5 million in zakat to
different causes and sectors of the under-served population. We contributed
a total of RM1.5 million to the six state zakat centres, while also channelling
RM4.0 million in direct contributions to deserving individuals and charitable
organisations. Of this sum, RM2.6 million went towards helping the poor
and needy to provide for themselves. A total of RM478,842 was channelled
towards knowledge cause (Fisabilillah), inclusive of Muallaf activities. Among
our Muallaf contributions were RM60,000 to Multiracial Reverted Muslim
(MRM) and RM25,000 to Interactive Da’wah Training to assist newly converted
Muslims. On our educational aid, AFFIN ISLAMIC contributed RM250,000 to
support deserving students pursuing tertiary education at local institutions
of higher learning such as Universiti Teknologi MARA (UiTM), Universiti
Kebangsaan Malaysia (UKM) and Management & Science University (MSU) to
CHAIRMAN’S
STATEMENT
Contribution to Tabung Zakat Angkatan Tentera Malaysia.
name a few. To help eligible recipients to settle their debts, the Bank disbursed
RM45,212.43 under Gharimin. Meanwhile, we also contributed RM75,000
towards Riqab (rehabilitation of Aqidah), which included RM50,000 to Pusat
Jagaan Remaja Puteri Raudhatus Sakinah.
In addition, we contributed RM700,000 to Tabung Zakat Angkatan Tentera
Malaysia, which manages funds to be allocated to deserving members of the
armed forces.
Besides our zakat contribution, through the AFFIN Barakah Charity Account-i,
AFFIN ISLAMIC donated RM18,360 to Yayasan Kanser Malaysia (YKM) for
the purchase of basic medical needs and equipment for poor patients; and
RM20,000 to Pemulihan Dalam Komuniti (PDK) Kasih Templer Autisma to
assist children with autism and other special needs.
We launched the AFFIN Barakah Charity Account-i as a Mudharabah savings
account in 2013 to facilitate charitable donations by depositors. Via the
account, customers pledge to donate a certain percentage of their monthly
earned investment profit to a worthy cause.
In addition, we jointly sponsored Utusan Melayu’s Tutor Pull-out Programme
under which specially prepared Tutor Pull-out were distributed to primary and
secondary school students, to supplement their normal curriculum learning
materials.
Affin Islamic Bank Berhad (709506-V) | Annual Report 2015
We also support corporate responsibility initiatives together with our parent
company, AFFINBANK. Every year, we join forces to hold a ‘Majlis Berbuka
Puasa Bersama Anak-anak Yatim’, at AFFINBANK’s Head Office to bring
cheer to orphans. This year, about 160 children from three orphanages in
the Klang Valley were invited to a ‘buka puasa’ (breaking of fast) dinner which
was attended by Senior Management from both banks during the month of
Ramadhan. We also presented the children with a token of ‘duit raya’ to add
to the occasion.
Contibution from AFFIN Barakah Charity Account-i to PDK Kasih Autisma.
15
CHAIRMAN’S
STATEMENT
Zakat presentation to Management & Science University (MSU).
Affin Islamic Bank Berhad (709506-V) | Annual Report 2015
Ultimately, we function to serve the needs of the nation. This is reflected
not only in our corporate responsibility initiatives but also in the emphasis
we place on providing our customers with products that truly meet their
needs. I’m pleased to share that in January 2016, as part of a Group
Strategic Transformation Programme, we are conducting a thorough review
of our position within the Islamic finance industry, assessing segments of
the population that we are ideally suited to serve, and plan strategically to
deliver products that will add value to these target markets. In addition, we are
building on our customer service to further enhance our customer experience.
The idea is ensure we keep relevant to a rapidly changing marketplace and
become a ‘dream bank’ not only for our customers but also our employees.
16
Our employees, after all, are our most valued assets. I would like to take this
opportunity to thank them, on behalf of the Board of Directors, for their hard
work and commitment to the Bank. I would also like to acknowledge our
Management for their able leadership which has seen the Bank grow over
the years. Finally, I would like to express my sincerest appreciation to all other
stakeholders from the regulators to our business partners, shareholders and
customers for their continued support. We value all your contributions, which
have helped us achieve all our successes to date, and are committed to keep
growing so we can attain even greater heights in the Islamic banking space
in the years to come.
Jen. Tan Sri Dato’ Seri Ismail Bin Haji Omar (Bersara)
Chairman
Presentation of Zakat to Pusat Jagaan Remaja Puteri Raudhatus Sakinah.
CEO’S
PERFORMANCE REVIEW
28.1%
GROWTH IN PROFIT
BEFORE ZAKAT AND
TAXATION
28.5%
GROWTH IN
NET
FINANCING
EN. NAZLEE BIN KHALIFAH
Chief Executive Officer
The year 2015 was challenging for the banking
sector in Malaysia - both Islamic and conventional
- due to a bearish capital market and decline of
our currency which, combined with an increase
in US interest rates, led to capital outflow. This
necessitated conscious efforts to increase
our capital adequacy, hence competition and
increased cost for deposits.
Despite the narrowing net profit margin (NPM) and challenging environment,
however, AFFIN ISLAMIC continued to grow our overall financing and assets
as compared to the previous year while increasing our profit before zakat and
taxation (PBZT) by 28.1% to RM117.4 million year-on-year, exceeding the
2015 target by 16.7%.
FINANCIAL RESULTS
In defiance of the challenging environment, the Bank’s performance for the
year ended 31 December 2015 was extremely encouraging, with positive
results in all key financial parameters. AFFIN ISLAMIC achieved a total
financing growth of 28.5% and experienced an increase in net financing,
advances & other financing to RM9.2 billion with our net impaired financing
ratio stable at 1.1%.
In an increasingly competitive environment, it is more important than ever to
operate at a high level of efficiency, and I am pleased to say that constant
efforts towards this end have had a positive effect on our balance sheet. By
managing our operating costs effectively, AFFIN ISLAMIC managed to improve
our cost to income ratio from 55.48% in 2014 to 47.61%. This played a part
in the increase in PBZT as reported above, and a 27.3% increase in profit
after zakat and taxation from RM66.6 million to RM84.8 million.
BUSINESS INITIATIVES
We continued to explore different market segments in order to better
understand consumers’ characteristics, needs and how we can better serve
them.
Our marketing efforts were concentrated on channels that appeal to an
increasingly more tech-savvy and ‘connected’ population via various online
and social media interaction. During the year, we organised competitions on
social media such as ‘Create Your Own Version of Raya Song’ and ‘Guess
for an iPad’. Supplementing on our online efforts, we extended our reach to
consumers belonging to Gen Y via more direct approach, such as presenting
a talk geared specifically towards first-time home buyers during Prospek
Hartanah.
These targeted efforts were supplemented by mass advertising in order to
increase brand visibility among the public. We ran a nationwide advertisement
campaign using digital displays at Giant hypermarkets, while also promoting
Ar-Rahnu and AFFIN ISLAMIC Impian Haji, a Term Deposit-i campaign, on
digital screens at selected locations.
Affin Islamic Bank Berhad (709506-V) | Annual Report 2015
This has been the result of conscientious efforts to strengthen the Bank at
our core – building its fundamentals while strengthening our relationships
with retail and commercial customers. We have continued to identify and
segmentalise our key markets, and invest in products that are relevant and
provide extra value to them.
The bank’s deposit portfolio continued to grow, surpassing the RM10.0 billion
mark, as a result of various collaborations with our parent, AFFINBANK. These
included promotions such as the AFFIN Best Deposit Campaign, Merdeka
Combo Campaign and Year End Bonanza 2015. Together, these enabled AFFIN
ISLAMIC to end the year with total assets of RM13.4 billion, an expansion by
5.2% from the previous financial year.
17
CEO’S
PERFORMANCE REVIEW
Ground breaking ceremony of Kompleks At-Tijarah AFFIN-UiTM.
Additionally, we created more awareness of our Term Deposit-i by advertising
it on a highly visible billboard in Petaling Jaya. Other products were advertised
in the New Straits Times daily and i-Property, Prospek Hartanah and Solusi
magazines. The Bank collaborated with strategic business partners such as
MARA, Management & Science University (MSU) and Universiti Teknologi
MARA to organise events and create awareness on Islamic banking.
Affin Islamic Bank Berhad (709506-V) | Annual Report 2015
2015 also saw AFFIN ISLAMIC work with other Islamic banking institutions
to raise the bar of Islamic financial services in the country, enabling Islamic
banks to become financial intermediaries. In October, the Bank, along with
five others chosen by Bank Negara Malaysia, set up a consortium - Raeed
Holdings Sdn Bhd - to offer a Shariah compliant Investment Account Platform
(IAP) providing investors the opportunity to fund businesses, corporates, new
growth industries as well as entrepreneurs with viable projects.
18
The IAP is an exciting development as it marks the first cooperation among
Islamic banks to create a new Shariah compliant investment avenue with
attractive returns. The initiative is particularly beneficial to investors who
do not have dedicated risk assessment resources, as this function will be
overseen by the sponsoring banks. IAP will also be positioned to facilitate
more public-private partnerships in financing strategic ventures within
specific industries. Through the IAP, government agencies can identify viable
ventures to invest in and create opportunities for the private sector to partially
fund them. It is also envisaged for IAP to be eventually positioned to facilitated
fund intermediation across borders.
The fact that AFFIN ISLAMIC was chosen by BNM to be part of this IAP
speaks volumes of our credibility and integrity, which are qualities that we will
continue to uphold as we serve our valued customers.
During the year, we also strengthened our position in the community via
various contributions. Key among these were a RM4.5 million contributed
to help build Kompleks At-Tijarah UiTM; and RM18,360 to Yayasan Kanser
Malaysia (YKM). The amount channelled to YKM was partly derived from our
AFFIN Barakah Charity Account-i, through which customers pledge a certain
percentage of their monthly profits to charity. This year, RM20,000 from this
savings account was also channelled towards Pemulihan Dalam Komuniti
(PDK) Kasih Templer Autisma, which cares for children with autism and other
special needs.
OUTLOOK & PROSPECTS
The year 2016 is going to be challenging for the banking industry, given the
expected slowdown in both global and local economies. We expect intense
competition for market share and more stringent regulatory requirement,
therefore; it is essential for banks to manage the envolving of customer
behaviours and expectations.
In response, AFFIN ISLAMIC together with our parent, AFFINBANK, are
embarking on a comprehensive Strategic Transformation Programme that will
analyze our position in the industry to capture greater growth, profitability and
sustainability.
In 2016, we continue to invest in new product capabilities and infrastructure
to seize opportunities offered by new affluent segments. Together, we will
step up efforts to enhance our efficiency and productivity to establish a highperformance culture by integrating strategic functions of AFFIN ISLAMIC with
AFFINBANK for greater operational effectiveness and optimal utilization of
resources.
CEO’S
PERFORMANCE REVIEW
Distributing ‘duit raya’ to orphans from selected orphanages.
The bank will continue to safeguard strong asset quality, pursuing disciplined
risk management framework, while maintaining best practices in corporate
governance and adhering to the regulators’ capital and liquidity requirements.
The launch of IAP with our partner banks will elevate our role in the expanding
Islamic banking world. We will continue to launch innovative Shariah-based
financial solutions and services to strengthen AFFIN ISLAMIC’s position as a
premier local and international Islamic financial institution.
ACKNOWLEDGEMENTS
The Bank is at an exciting juncture in our onward journey. We have achieved
much over the years, and in 2015, for which I would like to thank our various
stakeholders - from our customers to our partners and investors as well as to
our Board of Directors, Management Team and Shariah Committee members.
To everyone who has contributed to AFFIN ISLAMIC, thank you for your
support. Let us continue to work together for even better performance and
results in the future.
Affin Islamic Bank Berhad (709506-V) | Annual Report 2015
EN. NAZLEE BIN KHALIFAH
Chief Executive Officer
Launching of Kompleks At-Tijarah AFFIN-UiTM.
19
CORPORATE
DIARY
JAN
JUL
Zakat contribution to Pusat Zakat Melaka
AFFIN ISLAMIC contributed RM364,800 of its Zakat
funds to eligible Asnaf of Pusat Zakat Melaka. The
mock cheque was presented by Ustaz Mohd Faiz
Rahim, Head of Shariah Supervisory to Yang Dipertua
Negeri Melaka, Tun Mohd Khalil Yaakob during
Sambutan Maulidur Rasul held at Bukit Falah, Melaka.
JAN
Wakaf Desa Fahmi
A total of RM350,000 was contributed to Wakaf
Desa Fahmi, a centre that offers accommodation to
hardcore poor, homeless, neglected Muslims and
tahfiz students. The mock cheque was presented
by Deputy CEO AFFIN ISLAMIC, En. Ferdaus Toh
Abdullah to Dr. Kamarolzaman Hajar, founder of
Wakaf Desa Fahmi.
JUN
Ground breaking ceremony of Kompleks
At-Tijarah AFFIN-UiTM
The ground breaking ceremony of Kompleks
At-Tijarah AFFIN UiTM which was funded by
AFFINBANK & AFFIN ISLAMIC was held at UiTM
Puncak Alam campus on 11 June. The ceremonious
event was graced by Chairman of AFFINBANK
& AFFIN ISLAMIC, YBhg. Jen. Tan Sri Dato’ Seri
Ismail Hj. Omar (Bersara), Managing Director/
CEO of AFFINBANK, En. Kamarul Ariffin Mohd
Jamil, Chief Executive Officer of AFFIN ISLAMIC,
En. Nazlee Khalifah, Deputy Chief Executive Officer of
AFFIN ISLAMIC, En. Ferdaus Toh Abdullah, and Vice
Chancellor of Universiti Teknologi Mara, YBhg. Tan
Sri Dato’ Sri Prof. Ir. Dr. Sahol Hamid Abu Bakar. The
first in UiTM, the complex of Islamic Centre consists
of four components which are ‘Rukhsah’, Food &
Beverages, Da’wah and Medical & Health.
JUL
International Islamic University Malaysia
(IIUM) Hijrah Grand Iftar
In the month of Ramadhan, AFFIN ISLAMIC presented
zakat contribution amounting RM100,000 to
deserving students of International Islamic University
Malaysia (IIUM). The mock cheque was presented by
En. Nazlee Khalifah, Chief Executive Officer of Affin
Islamic Bank Berhad to, The Honourable Tan Sri Dato’
Seri Utama Dr. Rais Yatim, Advisor to the Government
of Malaysia and President of IIUM in a Hijrah Grand
Iftar held at IIUM Gombak.
MAR
Affin Islamic Bank Berhad (709506-V) | Annual Report 2015
Yayasan Kanser Malaysia
20
Yayasan Kanser Malaysia, a non-profit organisation
received donation of RM18,360.49. The amount
was raised from customers’ dividends through
AFFIN Barakah Charity Account-i, which provides
customers the option to donate a certain percentage
of their monthly earned Hibah (profit/dividend)
to a worthy cause.
APR
Islamic Relief Malaysia
A mock cheque of RM15,000 zakat contribution
was presented by Ustaz Helmi Afizal Zainal from
Zakat Management to En. Zairulshahfuddin Zainal
Abidin, Country Director of Islamic Relief Malaysia
in a ceremony held at Bangi, Selangor. Islamic Relief
Malaysia is a Non-Government Organisation (NGO)
that provides humanitarian aid in Asia Pacific region.
Zakat contribution to Management and
Science University (MSU)
Management and Science University (MSU) received
a total of RM100,000 to assist Asnaf students
and RM30,000 for MSU Mobile Clinic.The zakat
contribution was presented by Deputy Chief Executive
Officer of AFFIN ISLAMIC, En. Ferdaus Toh Abdullah
to President of MSU, Prof. Tan Sri Dato’ Wira Dr. Mohd
Shukri Ab. Yajid.
OCT
Pusat Jagaan Bakti Cahaya Hati
AFFIN ISLAMIC spreads cheer and happiness to
45 children of Pusat Jagaan Bakti Cahaya Hati
(PJBCH). The centre is a welfare home for orphans
and underprivileged children. The mock cheque was
presented by Head of Shariah Supervisory AFFIN
ISLAMIC, Ustaz Mohd Faiz Rahim, to Puan Hajah
Wahyuning, founder of PJBCH in Rawang, Selangor.
FEB
Pusat Zakat Perak
Contribution of RM364,800 to Pusat Zakat Perak
was presented by Encik Kamarul Ariffin, Chief
Executive Officer of AFFIN ISLAMIC during Corporate
Zakat Presentation Ceremony which was graced
by Duli Yang Maha Mulia Paduka Seri Sultan
Nazrin Muizzuddin Shah, the Sultan of Perak. The
ceremony was witnessed by Menteri Besar Perak,
Dato’ Seri Dr. Zambry Abdul Kadir.
JUL
Majlis Penyampaian Sumbangan Angkatan
Tentera Malaysia (ATM)
AFFIN ISLAMIC contributed zakat funds amounting
to RM700,000 to ‘Tabung Zakat Angkatan Tentera
Malaysia’. The zakat contribution was presented by
AFFIN ISLAMIC Independent Non-Executive Director,
YBhg. Tan Sri Dato’ Sri Abdul Aziz bin Abdul Rahman,
to Minister of Defence, YB Datuk Seri Hishammuddin
Tun Hussein during Majlis Penyampaian Sumbangan
Hari Raya Aidilfitri held at Ministry of Defence,
Kuala Lumpur.
NOV
MSU Islamic Finance Conference 2015
AFFIN ISLAMIC presented a seminar entitled Islamic
Finance: Maturing Towards Sustainable Talent at MSU
Islamic Finance Conference 2015. The event was
attended by 800 students from universities around
Selangor and KL.
NOV
Majlis Pelancaran Tabung Pendidikan
Kanak-kanak PDK Kasih Autisma
Ninety autistic and disabled children of PDK Kasih
Templer Autisma, a community rehabilitation
centre for autistic and disabled children received a
contribution amounting to RM20,000 from AFFIN
Barakah Charity Account-i. The mock cheque was
presented by Chief Executive Officer of AFFIN ISLAMIC,
En. Nazlee Khalifah and Deputy Chief Executive
Officer, En. Ferdaus Toh Abdullah to Dato’ Saiful
Bahri Abdul Hadi, Chairman of PDK Kasih Autisma at
Putrajaya Lake Club.
CORPORATE
DIARY
Affin Islamic Bank Berhad (709506-V) | Annual Report 2015
21
FINANCIAL
HIGHLIGHTS
Earnings Per Share (EPS)
Sen
‘15
23.5
‘14
18.5
‘13
16.4
‘12
25.8
AFFIN ISLAMIC’s EPS for the financial year ended 31 December
2015 stood at 23.5 sen compared to 18.5 sen the year before
with an increase of 27.0%.
Profit Before Zakat And Taxation
RM’million
‘15
117.4
‘14
91.7
‘13
87.3
‘12
106.4
AFFIN ISLAMIC achieved profit before zakat and taxation of
RM117.4 million for the year ended 31 December 2015 with
an increase of 28.1% compared with RM91.7 million in 2014.
Total Assets
RM’billion
‘15
13.4
‘14
12.7
‘13
12.3
‘12
11.7
AFFIN ISLAMIC’s financial position as at 31 December 2015
continued to remain strong with total assets of RM13.4 billion,
an increase of 5.2% compared with RM12.7 billion as at
31 December 2014.
Net Financing, Advances & Other Financing
RM’billion
‘15
9.2
‘14
7.2
‘13
6.0
‘12
5.1
AFFIN ISLAMIC’s net financing, advances and financing grew by
28.5% to RM9.2 billion compared to RM7.2 billion in 2014.
Deposits From Customers
Affin Islamic Bank Berhad (709506-V) | Annual Report 2015
RM’billion
22
‘15
10.0
‘14
9.9
‘13
9.3
‘12
9.0
Total deposits increased by 1.3% year-on-year to RM10.0 billion
as at 31 December 2015 compared to RM9.9 billion in the year
before.
Shareholders’ Equity
RM’million
‘15
954.8
‘14
772.1
‘13
704.4
‘12
655.0
Total shareholders’ equity of AFFIN ISLAMIC is RM954.8 million
as at 31 December 2015 with an increase of 23.7% compared
to RM772.1 million in 2014.